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Full text of "The Commission of Inquiry Generally into the Department of Finance: Final Report"

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JUSTICE CATHY DAVANl MAURICE SHEEHAN, CMC DON MANOA 

COMMISSIONER CHIEF COMMISSIONER - COMMISSIONER 



The Commission of Inquiry Generally 
into the Department of Finance 



FINAL REPORT 



Justice Cathy 


Davani 


Maurice Sheehan, CMG 


Don Manoa 


Commissioner 




Chief Commissioner 
29 October, 2009 


Commissioner 



CONTENTS 

Foreword 

ESTABLISHMENT 
HISTORY OF COMMISSION 
CONDUCT OF INQUIRIES 

A. Natural Justice: Right of Parties to be Heard 

CLAIMS PAID AND AWAITING PAYMENT BY DEPARTMENT OF FINANCE A. 
Additional Claims Notified to Commission CONSTITUTIONAL BASIS FOR CLAIMS 
AGAINST THE STATE 

A. Claims By & Against the State Act 1996 

B. 'Public Finances (Management) Act 1995 

C. National Executive Council Decisions 

D. National Executive Council Directions Ignored 

E. Procedure for claims 

F. Settlement of Claims from Legally Available Funds 

G. Time for Payment of Judgment at Discretion of State 
H. Excluded From Orders for Payment of Awards 

I. Summary of Commission's findings 

(a) Statutory Process Appropriate 

(b) Failure of State Agencies 

(c) Reasons for Failure by State to Defend Claims 

(d) Breach of Duty 

(e) Default Judgments 

(f) Court and Out-of-Couit Settlements 
(8) Brief Outs 

DEPARTMENT OF JUSTICE AND ATTORNEY GENERAL 

A. Department Restructure 

B. Attorney General 

C. Solicitor General 

D. State Solicitor 
DEPARTMENT OF FINANCE 

A. Introduction 

B. History 

C. Inquiries 

(a) The Department Structure & Responsibilities 

(b) Public Finances (Management) Act 1995 ("PFMA") 

(c) Budget Process 

(d) Accounting Principle 

(e) Accounting Information System 

(f) Payment Procedures 

(g) Filing and Storage of Records 



(h) Integrity of the Accounting System 48 

(i) Improper and Illegal Sourcing of Funds to Settle Claims 50 

(j) Establishment of Trust Fund Suspense Account No. 2 54 

(k) Mr. Tbaddeus Kambanei's Evidence 56 

Q Conduct of Inquiries 57 

(m) Auditor General Reports 59 

D. Common Findings in respect of Claims 59 

(a) Funds illegally sourced from other Appropriation 59 

(b) Failure to comply with NEC Decisions 60 

(c) Preferential basis of settlement of Claims 60 

(d) Non-completion of FF3s and FF4s 60 

(e) Overpayment of Claims 61 

(f) Overpayment of Interest 61 
(g> Cancelled Cheques being Presented 61 
(h) Incorrect narration of Cashbook 61 
(i) Non compliance of Income Tax Act 62 
(j) Release of cheques direct to Claimants 62 
(k) Department's lack of consultation with other State agencies 62 

Cheque Clearance 62 

(m) Payment of Legal Fees without Certificate of Taxation 63 

(n) Dysfunction of Internal Audit 63 

E. Recommendations 63 

VIII. INVESTIGATION REPORTS 67 

A. Land 67 

B. Police 188 

C. Civil Works 375 

D. Employment with the State 458 

E. Procurement of Good and Services 537 

F. Decisions of the National Executive Council 615 

G. Bougainville Crisis 702 

IX. RECOMMENDATIONS ARISING FROM INQUIRY 763 

A. Department of Finance 733 

B. State Law Offices 766 

(a) Attorney General 

(b) Solicitor Genera] jqj 

(c) State Solicitor j A g 

(d) National Court 769 

State Court j A g 

National Court Registry ' 770 

(e) District Court Registry 772 

C. Amendments to Claim By <& Against the State Act 1996 113 



(a) No Default Judgments against The State 773 

(b) Executive Action Requited 774 

(c) Notice of Claim to be Served on Attorney General 774 

(d) Amendments to Notice of Claim 775 

D. Amendments to Public Services (Management) Act 1995 778 

E. Brief-Outs 779 

F. Taxation 782 

G. Out of Court Settlements 784 
H. Referrals of Leaders & Professionals 784 

(a) Ombudsman Commission 784 

(b) Lawyers Statutory Committee 785 

(c) Attorney General/LTI Council 785 

I. Civil Actions and Recovery 786 J. Criminal Prosecutions7 

X. REMEDIAL ACTION AND RECOMMENDATIONS 789 

A. The Government, the National Executive Council to Implement Recommendations 792 

B. Whistle-blowers 796 

C. Freedom of Information Act 797 

D. Trial By Jury 798 

E. The Commission of Inquiry Be Continued. 798 

XI. COURT CHALLENGES INVOLVING THE COMMISSION 800 

A. Challenges to Jurisdiction of Commission 800 

(a) First Category Court Actions 800 

(b) Second Category Court Actions 804 

B. Related Actions 807 

C. Unnecessary Delay to Work of Commission 809 

XII. APPENDIX 8 " 



Foreword 

Commissions of Inquiry are appointed to inquire into those matters of public interest 
controversy or debate where the Minister is of the opinion that in the interests of public 
welfare, the facts and circumstance of such matters should be publicly established and 
brought to light. 

The Right Honourable, Grand Chief Sir Michael T Somare GCL GCMG CH CF K St J 
appointed the Commission of Inquiry into the Department of Finance on concerns as to the 
disposition of public monies described in the Statement of case that accompanies the 
Instrument of Appointment. 

The Commission has throughout its inquiry been conscious of the serious duty entrusted to 
them and have endeavoured to honour that trust 

In so doing, the Commission acknowledges the support of the Prime Minister throughout 
the Inquiry and the manner in which he has honoured its independence. 




Justice Cathy Davani 
Commissioner /Chief Co 



^Vft.^.T;.. ys. ../..... x ■% 

urice Speehan, CMG ^JDon Manoa 

/Commissioner 



issioner 



29 October, 2009 



I. ESTABLISHMENT 

The Commission of Inquiry was established under Instrument executed by the Prime 
Minister on 12 May 2008: 

"Commission of Inquiry A.ct (Chapter 31) 
COMMISSION OF INQUIRY 

Into 



THE MANAGEMENT GENERALLY OF PUBLIC MONIES BY THE 
DEPARTMENT OF FINANCE 

To: MAURICE SHEEHAN (Chief Commissioner), 

CATHY DAVANI (Commissioner), and 

DON MANOA (Commissioner). 



STATEMENT OF CASE 

STATEMENT OF CASE ON WHICH THE COMMISSION OF INQUIRY IS 
ORDERED INTO THE MANAGEMENT OF PUBLIC MONIES BY THE 

DEPARTMENT OF EINANCE 

A. The management of the Department of Finance, in particular in relation to the 
disbursement of public monies, has received considerable publicity in recent months 
with the arrest and prosecution by the police of senior officers of the Department 
for various offences under the Criminal Code Act (Chapter 262). During this time, 
the expenditure of public monies has given rise to considerable public disquiet and 
debate. Disquiet has principally been in the manner in which claims for payment of 
public funds have been made to the Department, the method used to quantify such 
claims and the authorisation for such payments, the method used to quantify such 
claims and the authorisation for such payments to be made particularly in relation to 
consent and default judgments and out-of-court settlements entered against the 
State. 



B. The Department of Finance (the Department) was established under the Public 
Services (Management) Act 1995. By notice published in National Gazette No. 
G65 of 26 th August, 1977, the Head of State, acting on advice of the National 
Executive Council, determined in accordance with Section 21 of the Public 
Services (Management) Act 1995 that the Department shall have the following 
functions:- 

(a) To be responsible for the management of policies, regulations and laws 
pertaining to the collection and disbursement of public monies; 

(b) To administer and provide advice on debt management and foreign aid; 

(c) To formulate and administer the annual estimates of revenue and 
expenditure; 

(d) To control and administer Government revenues. 



C. In the exercise of its functions, the Department manages and disburses public funds 
in accordance with the Public Finances (Management) Act 1995&nd the 
Regulations and Financial Instructions made thereunder. 

D. The offices of Attorney- General and Solicitor General are established under the 
Attorney-General Act 1989. Under Section 7 of the Act, the Attorney- General is 
the principal legal adviser to the National Executive Council and, as principal legal 
advisor, is required to tender legal advice and opinion to the National Executive in 
accordance with Section 8. Under Section 9 of the Act, the Attorney-General 
appoints the Solicitor-Genera whose primary function is to appear as an advocate 
for the State in matters coming before the courts in Papua New Guinea. As part of 
his function, the Solicitor- General recommends to the Department matters before 
the courts that are to be settled out of court or by consent judgment. 

E. The controversies surrounding the Department, in particular in relation to payments 
made in satisfaction of out-of-court settlements, default or consent judgments or 
other claims against the State, have given rise to concerns that the management of 
the Department particularly since 2000 was not done transparently and in 
accordance with good management and accounting practices, and that public 
monies have been made falsely, fraudulently, improperly or in a manner not 
authorised by law. 

F. The Commission of Inquiry into the Management of Public Monies by the 
Department of Finance is hereby established pursuant to Section 2(1) of the 
Commissions of Inquiry Act (Chapter 31). 



COMMISSION OF INQUIRY 

TERMS OF REFERENCE 

KNOW you that I, Grand Chief Sir Michael Somare, Prime Minister of Papua New Guinea, 
reposing confidence in your integrity and ability do, by virtue of the powers conferred by 
Section 2 of the Commission of Inquiry Act (Chapter 31) and all other powers me enabling, 
hereby:- 

(a) Require you as Commissioners and the Commission to enquire into and report on 
the following matters:- 

1. to inquire into the existence and extent of illegal, false or improper claims 
for payment made to the State and approved or paid by the 
Department of Finance in the period 2000 - I s ' July, 2006 and to 
establish:- 

(i) the extent of illegal and improper claims; Judgments or out- 

of court settlements against the State; and 

(ii) the identity(s) of those persons who have made or been paid 
such claims; and 

(iii) the value of such claims for each year in the period 2000- 1 st 
July, 2006; and 

(iv) the number of illegal, false or improper claims, Judgments or 
out-of-court settlements, approved for payment by the 
Department of Finance in the period 2000 - 1 st July, 2006; 
and 

(v) the number of illegal claims that have been paid by or from 
the Department of Finance in the period 2000 - 1 st July 
2006; and 

(vi) the amount so paid in each year during the period 2000 - 1 st 
July 2006; and 

(vii) whether, in the opinion of the Commission, the Department 
of Finance failed to detect and disallow illegal, false or 
improper claims and if so, how and why those failures 
occurred; and 



(viii) the degree to which the bona fides of each illegal, false or 
improper claim was investigated by the Department of 
Finance before approval and/or payment; and 

(ix) the involvement (if any) of officers of the State in the making 
approval and payment of illegal, false or improper claims 
against the State; and 

(x) how and by whom such illegal, false or improper claims were 
approved; and 

(xi) the degree and extent of involvement of legal firms in the 
making and payment of illegal claims against the State; and 

(xii) whether all tax or other imposts arising from the payment of 
illegal, false or improper claims, Judgments or out-of-court 
settlements by the State during the period 2000 - 1 st July, 
2006, were paid either by the State or payees from the State; 
and 

in compliance with these Terms of Reference the Commission is to 
consider all payments by the Department of Finance in excess of 
K300,000.00 during the period 2000 - 1 st July, 2006 and identify 
those payments that are illegal, fraudulent or otherwise improper; 
and 

The Commission is to inquire into all Consent and Default 
Judgments entered against the State in the period 2000 - 1 st July, 
2006 and-conclude as to the number and value of these judgments 
and the circumstances in which they came to be entered against the 
State; and 

The Commission is to inquire and conduct whether the entry of any 
Default Judgment was the result of negligence or failure by any 
Officer of the State and to make recommendations for action against 
those Officers; and 

The Commission is to make recommendations for action by the State 
in respect of Consent and Default Judgments made against it and the 
liabilities therefrom; and 

The Commission is to examine each out-of-court settlement made 
against or entered into by the State in the period 2000 - 1 st July. 2006 
and conclude as to:- 



(9 The facts and circumstances in and by which each out- 

of-court settlement made; and 



i) 



The legality of each out-of-court settlement; and 

Whether liability should have been admitted by the 
State; and 

The involvement of the Offices of the Attorney- 
General and the Solicitor-General in each out-of-court 
setdement; and 

' The quantum accepted and agreed by the State and the 

propriety and legality of that agreement; and 

V lv ; Whether the interests of the State have been 

prejudiced in respect of any out-of-court setdement 
entered into by the State; and 

(vii) What changes should be made to protect the State and 
public monies from the making or payment of 
improper out-of-court settlements; and 

6. To inquire into the systems that protect public monies from 
illegal claims, to identify the core failures that have exposed the 
State to improper liability and allowed public monies to be 
applied to payment of illegal, false or improper claims 
Judgments and out-of-court settlements and make 
recommendations to secure or further protect public monies 
from such misapplication; and 

7. To inquire into the role of the Department of Finance in 
screening all claims for payment by the State and detecting and 
rejecting illegal, false or improper claims to establish the extent 
of Department responsibility in this regard and conclude 
whether the Department of Finance has complied with these 
obligations; and 



To inquire into the involvement of the Office of the Attorney- 
General, the Solicitor-General, the Department of Finance and 
the Registry of the National Court of Justice in the making and 
payment of illegal, false or improper claims or judgments 
against the State in the period 2000 - 1 st July, 2006; and 



9. To inquire into and identify the source of monies used to pay all 
identified illegal, false and improper claims and conclude as to the 
legality of the use of those sources; and 

10. To inquire into and conclude as to the involvement of legal firms in 
the making and paying of illegal, false or improper claims, Judgments 
or out-of-court settlements against the State; and 

11. Inquire into and identify any improper or illegal involvement in or 
benefit or payment to any State Officer made for or in any way arising 
from false, illegal or improper claims, Judgments or out-of-court 
setdements against the State in the period 2000 - 1 st July, 2006; and 

12. To inquire and conclude as to whether the relevant Attorneys- 
General and Solicitors-General in the period 2000 - 1 st July, 2006 have 
advised and protected the Sate to an acceptable and competent 
standard in negotiating, entering and processing for payment Consent 
Judgments and out-of-court settlements; and 

13. Make any further recommendations arising from the inquiry; and 

14. Make such referrals for prosecution as the Commission deems 
appropriate; and 

AND I FURTHER direct that the inquiry be held in the National Capital 
District, or at such other place or places in Papua New Guinea or elsewhere 
as to you may appear necessary and expedient. 

AND I FURTHER direct that the inquiry shall be held in public, but I 
approve that you may permit to be given in private, any evidence that in the 
course of your inquiry you, in your absolute discretion, consider needs to be 
given in private in accordance with Section 2(5) of the Commissions of 
Inquiry Act; 



AND I FURTHER direct that you shall commence the inquiry without 
delay and proceed therein with all dispatch and render to me your final 
report within nine (9) months from the date of commencement of hearing. 



AND I FURTHER direct that this Instrument relating to the Terms of 
Reference of Commission of Inquiry into Department of Finance supersedes 
any previous Instrument issued under my hand. 



Dated this 12* day of May 2008. 



M.T. SOMARE 
Prime Minister" 



The Commission is required by its Terms of Reference to enquire and report on the legality 
or propriety of claims against the State made and settled through the Department of 
Finance during the period 1 st January 2000 to 1 st July 2006. That inquiry includes examining 
the source of funds expended in setdement and the conduct of parties, in particular State 
officers involved in the setdement and payment of those claims. 



II. HISTORY OF COMMISSION 

When first established in August 2006 the period of inquiry to 1 July of that year was 
recent and current. However, the life of the Commission since first gazettal has been 
uneven and fragile. Delays and interruption have caused the inquiry period to lapse into a 
now three year past. 

In the two years to September 2008, the Commission was suspended and reestablished five 
times. This was substantially because of active opposition to the work of the Commission, 
controversy as to over expenditure in set up costs in 2006 by the departments then 
administering the Commission funds, and failure by those Departments to provide any or 
adequate budgeted funds for 2007 and 2008. In that period the Commission was unable to 
function except briefly between February and May 2007, and March 2008. 

The reinstatement of the Commission by the Prime Minister on 12 May 2008, together 
with the provision for the Commission to control its own funds under a separate trust 
account, finally enabled the Inquiry to undertake the task set by its Terms of Reference. 
Even so, full promulgation of the Inquiry was not possible till funding and Ministerial 
authority for a separate trust account occurred in September 2008. Since then time 
consuming court challenges to Commission jurisdiction have hampered but not prevented 
the inquiry process. 

Accordingly, of the three years the Commission has been established it has in fact only 
been operational for approximately one of those years. 



III. CONDUCT OF INQUIRIES 

Pursuant to the directions of the Terms of Reference, the Commission inquiri.es have all 
been conducted in public. While supporting documentation and files have been supplied by 
agencies and individuals voluntarily or upon request, there has been no hearing of evidence 
in private. Commission hearings have been all conducted in Port Moresby except that 
evidence in 38 claims originating in the Highlands was taken in Mt Hagen during 17-22 May 
2009. 

All proceedings have been recorded in a publicly daily transcript and posted to the 
Commission web page on the internet (www.coifinance.org.pg) 

As at date of this report the Commission has completed full inquiry of 45 claims while 212 
more are under way and have been progressed such that while essential basic facts have been 
established in these matters, opportunity for response by parties involved in them is still 
required before conclusions can be lawfully drawn and reported. 

The Commissions' investigations have been directed to testing all claims against the 
requirements of the statutory code and examining the conduct of the public officers dealing 
with them in accordance with the duties outlined under the Act. Those duties include the 
obligations of all public officers in dealing with public funds to comply with the Public finances 
(Management) Act 1995, Financial Regulations and Instructions. 

Importantly there must be compliance also by all public officers with the obligations 
imposed by the Government through Directions of the National Executive Council, dealing 
with settlement of claims against the State and or the disposition of public funds. 



This entails examination of the documentation of all claims, the Court files, the files of the 
department which is claimed to be .liable in an action (eg., Police, Lands, Defence, Works 
Departments etc), the files of the Attorney General's Office and the financial records and 
authorisations of the Finance Department for each of the claims under investigation. 

Retrieving basic documents from the Courts and the departments concerned has been and 
remains time consuming. Access to the Department of Finance and its records has been at 
all times difficult. Even when cooperation has been forthcoming, the production of files, 
or the lack or loss of files has delayed the Commissions task. Where there has been lack of 
cooperation or even apparent obstruction, delays have been prolonged. Persistence 
nevertheless has brought measurable success. On the other hand, other than those taking 
court action contesting the Commission of Inquiry jurisdiction, the great majority of 
witnesses have responded readily to Commission Inquiries. In the process, a total of 517 
summons to witnesses have been issued. 

A. Natural Justice: Right of Parties to be Heard 

Fundamental to the Inquiry process has been strict adherence to principles of natural 
justice by affording all person or bodies having an interest in matters before the 
Commission an opportunity to be heard. 

For this purpose all persons or bodies with an interest in a matter who was or might be 
affected by findings of the Commission, particularly findings that might be or had potential 
to be adverse to them or their interests have been given opportunity to respond, refute or 
comment on a reasonable summary of facts supplied to them before any conclusions have 
been drawn by the Commission. Most have taken such opportunity, by oral or written 
evidence or both. In regard 



10 



to the few who have declined opportunity, the Commission has been obliged to reach its 
conclusions on the facts before it. 



11 



. CLAIMS PAID AND AWAITING PAYMENT BY DEPARTMENT 
OF FINANCE 

The Commission has ascertained that between 1 st January 2000 and 1 st July 2006 
not less than K572, 591,348. 70 was paid out by the Department of Finance in 
satisfaction of some 539 claims against the State in sums of K300,000.00 or over. 

That total was made up by payments in the years: 

> 2000 K38.646.701.44 

> 2001 K44.835.549.77 

> 2002 K89.462.673.55 

> 2003 K70.666.461.76 

> 2004 Kl 52.428.905.38 

> 2005 K121. 716.446.76 



> 2006 to July K54.834.610.34 
K572,591,348.70 

All of those claimants have been identified but the Commission has been unable in 
the term of its inquiry to examine each and everyone of those claims to determine 
exhaustively the legitimacy or propriety of them all. Inquiry does show however 
that except for a very small number they comprise payments on liability incurred 
under default judgments or out of court settlement. 

A. Additional Claims Notified to Commission 

Late in the Commission's term, the Commission was advised that Department of 
Finance had, by direction of the Minister returned a further 244 outstanding claims 
files already certified by the Solicitor General for payment by the State but as yet 
unpaid, to the office of the Attorney General for his reconsideration and later 



12 



resubmission for settlement. The sum of these as yet unpaid outstanding 
judgment debts of the State amount to K211 million. The Commission has yet 
to examine these in detail. 

While some may fall outside of the Commission inquiry period and or scope, the total of as 
many as 783 claims amounting to some K780 millions, paid or certified for payment, not 
only demonstrates the massive losses of public funds that untested claims against the State 
have generated, but also emphasises the need for ongoing inquiry and for action that will 
halt such losses. 



13 



v. CONSTITUTIONAL BASIS FOR CLAIMS AGAINST THE STATE 

The Constitution provides that the State of Papua New Guinea "may sue and be sued in 
accordance with an Act of the Parliament" [Section 247(2) Constitution]. That Act is the 
Claims Bp andAminst The State Act 1996. It provides a mandatory code of procedure for each 
and every claim against the State. 

A. Claims By & Against the State Act 1996 

The key procedures under the Act provide: 

® Formal notice of a claim against the State to be made within 6 

months of events giving rise to the cause of action, o Determination by 
the Court of the liability of the State and an award of proven damages. This is 
evidenced by the Court issuing a Certificate of Judgment. 

• The Solicitor General within 60 days to endorse the Court Certificate, 
confirming the judgment may be satisfied (or that the State will take 
further action) 

• The Secretary of Finance on receipt of a Certificate endorsed for 
satisfaction of the judgment is authorised to meet the judgment from 
legally available funds. 

The process of claim commences with Section 5 which provides that failure to give notice 
of a claim to the State within six (6) months of events giving rise to the claim renders it 
unenforceable at law. The requirement for notice of claim not only sets up a defence 
against late or delayed claims, it also reflects measures for good governance, providing a 
current notice of potential liabilities of the State in its management of public funds. This is 
a key provision establishing a statutory time bar to claims not compliant with the Section. It 
states: 



14 



"5. Notice of claims against the State. 

(1) No action to enforce any claim against the State lies 

against the State unless notice in writing of intention to make a claim is given in 
accordance with this section by the claimant to — 

(a) the Departmental Head of the Department responsible forjustice matters; or 

(b) the Solicitor-General 

(2) A notice under this section shall be given — 

(a) within a period of six months after the occurrence out of which the claim 
arose; or 

(b) where the claim is for breach of a contract, within a period of six months 
after the claimant became aware of the alleged breach; or 

(c) within such furtheperiod as — 

(i) the Principal Legal Adviser; or 

(ii) the court before which the action is instituted, on 

sufficient cause being shown, allows — . " 

For any claim based on a cause of action originating before the Act became law, but not 
commenced till after the Act came into operation on 20 February 1997, notice had to be 
given within six (6) months of the commencement of the Act (Section 21(2)). 

The Commission's inquiries have found that time and again files of the Solicitor General's 
office disclose that failure by claimants to give proper or adequate notice of claim within 
time has passed unnoticed or ignored preventing a vital first defence to unlawful claims. 



15 



Since amendment to the Act in 2002, Section 2A provides a specific defence to any claim 
not complying with finance procedures under the Public Finances (management) Act 1996. The 
importance of this provision is confirmed by the incorporation of the same provision in 
the Public Finances (Management) Act 1996 m Section 47D. 

There has been no evidence of compliance being required by public officers nor has non 
compliance been challenged in any settlement inquired into by the Commission. 

B. Public Finances (Management) Act 1995 

The Act and the Regulations and Financial instructions issued under the Act, detail in 
statutory form the process for administration of public funds. This includes the authority 
and duties of the appointed Minister and officers of the Department of Finance. 
Essentially, failure to comply with the Act is to act unlawfully. 

This Act provides (Section 61) that no one may without the approval of the Minister of 
Finance enter into any contract on behalf of the State for goods or services involving 
payment exceeding Id 00,000. That restriction includes and applies to any contracts and or 
deeds of settlement of claims against the State. It applies not just to the Secretary and 
officers of the Department of Finance but all Departments including the Attorney General 
and Solicitor General. 

Because out-of-court settlements to resolve a claim, are voluntary contracts 

regarding disposition of public funds, the State officers can only lawfully act within 

the authority given to them when they act in compliance with this Act. Before 

committing the State to settie with payment of sums caught by Section 61 there 

must be authority granted pursuant with the Act, and, "moneys lawfully available" to do so. 



16 



Thus, any contract of settlement, agreement or deed of release entered without ministerial 
approval are invalid and unenforceable. The Supreme Court has confirmed this in NCDC - 
v- Yama Security Services [SC 835] following Fly River Provincial Government -v- Pioneer 
Health Services Ltd [SC 705]. 

Thus the Secretary has no authority to settie claims for goods and services that do not have 
the pre-committal documentation that must issue under his authority prior to such contracts 
being undertaken. 

The Secretary of Finance has no authority himself to settle Claims Against the State. He has 
the authority to make payments of the judgments lawfully incurred by the State from legally 
available funds but can only ever act in accordance with the terms of the Public Finances 
(Management) Act. 

In addition The Public Finances (Management) Act specifically states that any settlement of claim 
for the price of supply of goods or services is unenforceable in any court unless authorised 
by pre-committal documentation issued under Financial Instructions. 

Section 47D(2) states - 

'A claim for the price arising from the sale ofproperty or stores orfor the supply of goods or 
services to the State shall not be enforceable, through the courts or otherwise, unless the seller of 
the property or stores or the supplier of the goods or services produces — 

(a) an Integrated Focal Purchase Order or Claim (ILJ'OC); or 

(b) an Authority to Pre-commit Fxpenditure. " 

It is patently clear that this section is included to provide a defence for the State against 
unlawfully manufactured claims as it is repeated verbatim as Section 2A of the Claims By and 
Against the State Act 1996. 



17 



There has been no evidence before the Commission that this provision has ever been 
raised or referred to as a prerequisite of claims settied by either the Department of Justice 
and Attorney General or the Department of Finance which Departments surely must have 
been the proponents of these prerequisites to the State being contractually bound to any 
contract for procurements of goods and services. And likewise, obliged to monitor 
compliance with this provision. 

C. National Executive Council Decisions 

'The Government has been aware that claims against the State were a cause of serious loss 
of public funds though it would appear from NEC records of the Inquiry period examined 
by the Commission, not aware of the actual extent of them because there had been no 
records kept of such. It did make specific directions for their control. 

NEC Directions are the orders or instructions for the implementation of the decisions of 
Government they issue to the heads of all Government agencies. They have the force and 
authority of law. 

Under Directions NG07/2002, 150/2003 and 21/2006 the NEC gave specific notice to 
the Finance Secretary and the offices of the Attorney General and Solicitor General 
detailing the course that these offices were to take in the conduct of claims against the 
State. 

In NG07/2002 (22 August 2002) the NEC directed that to ensure achievement of the 2002 
Supplementary Budget: 



18 



"That there he no more out-of-court settlements by any State body or authority, including the Attorney 
General and the Solicitor General, without the approval of the NEC, acting on advise from the 
CACC." 

This Order remained in force for the year following. 

In 2003 the NEC substituted NG7/2002 with Direction 150 of 2003 (25 July 2005) which 
stated; 

"That all out-of-court settlements including consent orders are to be reviewed and cleared by the Attorney 
General or his nominee. 

' '.Directed the Solicitor General in consultation with the Attorney General to settle any future claims for 
amounts only up to K1 million provided that they are satisfied subject to legalprinciples and court 
precedentfollowing production of evidence. " 

That all out of court settlement in excess of ~K1 ,000,000 are to be approved by the NEC prior to any 
payments by the Department of Finance; 

That the Attorney-General immediately apply to the Court for Judicial Review of any questionable 
claims or out of court settlements in excess oj K3 '00, 000. 00; 

That the Attorney-General review the relevant legislation with the view for amendments to ensure claims 
against the State are better managed and defended and State liability is minimised; 

Directed the Attorney-General to ensure an injunction is sought to prevent the Secretary for Department 
of Finance from paying those claims certified as fraudulent or questionable. " 



19 



Examination by the Commission of the settlements and the deeds recording them have 
been shown to be, in large, directly in defiance of NEC Directions NG07 of 2002; NG150 
of 2003 and 21/2006. 

D. National Executive Council Directions Ignored 

Every public officer is given the authority to carry out the duties necessary for their posts, 
but any discretion they have cannot be decided on personal whim, it must be exercised 
within the law. That does not include authority or discretion to ignore direct orders of the 
National Executive Council, particularly regarding the disposition of public funds. 

In evidence before the Commission current and past Secretaries of Finance, and former 
Attorneys General and Solicitors General have all acknowledged they were fully aware and 
conversant with the directions but incredibly, each stated that they were "mere policy" 
statements that need not be followed. Those directions, they said, did not restrict their 
authority to settle claims coming to them and they had accordingly continued to settle 
claims as they saw fit. One result of this was some K60 million was signed off in deeds of 
settlement in claims against the State in a period of twelve (12) months (August 2002 to 
July 2003). 

The Commission finds: 

• In all settlements so far examined by the Commission, not one has 
been conducted in compliance or in accordance with any NEC 
direction. The officials involved simply disobeyed direct orders of 
the government. 

• This is the most significant breach of duty by public officers that 
the Commission has found in its inquiries. 



20 



Simply stated the directions of the National Executive Council, the government with the 
authority to administer the State and to control the funds budgeted by Parliament have been 
ignored by key officers. Public funds have accordingly been disposed of without lawful 
authority. 

E. Procedure for claims 

Each claim within the Commission's Terms of Reference constitutes a separate inquiry as to 
both the lawfulness of the claim and the propriety of its settlement, to be measured against 
the statutory process set out in the Claims By and Against the State Act 1996. 

Under the statutory process it is die Courts role to determine both claim and compensation. 
It is the State's role to determine when and how a judgment is to be met from lawfully 
available funds. Where the Courts have tried and decided the liability and damages to be 
paid in a claim against the State, there have been few adverse consequences. But the 
Commission's inquiries show that in the great majority of cases the Court has not arbitrated, 
rather it has too often been the unwitting instrument legitimising by consent orders, 
settlements of wholly untested claims without factual or lawful substance concluded 
unlawfully by officers of the Departments of Finance and Justice and Attorney General. 

Of the matters investigated, the Commission has found that less than five (5) of all claims 
were decided on trial and assessment by the National Court; all others were determined, on 
failure to defend by default judgment, out of court settlement and consent orders sealed by 
the National Court in the claimants' favour. 

The Act stipulates the processes from first notice of claim, through to trial, judgment and 

how settlement by the State is to be carried out. Essentially, the Courts have the authority to 

decide the liability of the State and determine the 



21 



damages that should be awarded. The State decides when and how that award 
should be paid. 

Provisions of the Act also define the limits of Court's jurisdiction in claims against the 
State. Specifically the Courts are restricted to determining liability and or the award of 
damages only, and the issue of a certificate of judgement of its award. 

F. Settlement of Claims from Legally Available Funds 

By the Claims Act, settlement of all claims against the State must be met from legally 
available funds. That is from funds authorised by Parliament. The annual National Budget 
appropriations for settlement of claims against the State and court orders for the years 
2000 to 2006 totalled K300 million, pointing to an expenditure of some K270 million 
beyond budget in claims of I<300,000 and over. The Commission has sought to inquire 
into the source of those funds in excess of the budget. 

G. Time for Payment of Judgment at Discretion of State 

Specific provisions of the Act state that no judgment or successful claim becomes a debt 
that is immediately due and payable forthwith, or on demand. Setdement, that is actual 
payment out of a judgment or claim lies, at the discretion of the State through the 
Secretary of Finance. He is to make payment in "reasonable time" from "moneys legally 
available," - that means budgeted funds. As part of the Secretary's discretion, the Act 
provides he may decide on payment by instalments. That covers situations where there 
may be no funds currently available, or may not be available till further budget provision is 
made by Parliament. 

It is left to the State to make payment of such awards as and when the State through the 
Secretary of Finance decides, albeit in a reasonable time. 



22 



H. Excluded From Orders for Payment of Awards 

(JfT 

TheyjAct. specifically excludes the Courts from making any order of execution against the 
State to enforce payments. Similarly, no orders of contempt or mandamus may issue to 
enforce execution of a judgment. 

'M Court givingjudgment against the State may not include any order as to time or method of payment 
for satisfaction of the judgement." (Section 12(2)) "In any suit, execution or attachment or process in the 
nature of attachment may not be issued against the property or revenue of the State (Section/ 3(1)" 

These provisions have been overlooked in several actions in the National Court where the 
Courts, contrary to the provisions of the Act, have issued Orders directing the State to make 
payment of awards immediately or within specified times. There have also been contempt 
orders issued to departmental heads when Court ordered payments have not been 
forthcoming. 

These issues are presently before the Supreme Court in SCA. No. 53 of 2008 Yama 
~vs- Yery Louma, The Commission of Inquiry and The State. This is a matter in which 
the Commission was joined as a party and where it supported the provisions of the Claims 
Act. The ruling of the Court will hold great significance for the integrity of the Claims Act 
and the statutory process of claims against the State. 

I. Summary of Commission's findings 

The plain conclusion is that in all but a handful of claims the statutory process has been 
grossly abused, allowing illegitimate and improper claims and excess payments and excessive 
payouts to be legitimised. 



23 



Worse is the ease with which this has been allowed to occur. As well, the granting of 
"priority" or "urgency" to one claim over another, clearly demonstrates how the offices of 
the Attorney-General and the Department of Finance have succumbed too easily to the 
demands or pressures of claimants. There has been evidence too of officers benefiting in 
these too prompt settlements. 

(a) Statutory Process Appropriate 

The Commission is satisfied that the process of claim prescribed by the Act is not flawed. 
It is only non compliance, particularly by public officers that has enabled it to be 
subverted. The process required by the Act has been short circuited by unwarranted 
default judgments, out-of-court setdements and or consent judgments before or during the 
court process. 

The Commission does however recommend amendments to the Act that can add to its 
clarity and effectiveness. 

(b) Failure of State Agencies 

In answer to the question in paragraphs 6 and 12 of the Terms of Reference, it must be 
concluded that in the great majority of cases examined, the Department of Finance did not 
meet its obligations to protect the funds of the State and the offices of the Attorney 
General and the Solicitor General have not advised and protected the State to an 
acceptable and competent standard. 

(c) Reasons for Failure by State to Defend Claims 

Typically where a claim lodged in the National Court has not been defended the reasons 
most commonly advanced in evidence by the Justice and Attorney General's Department 
before the Commission have been; 



24 



• The department concerned having being given notice of claim has failed to 
instruct the Solicitor General to defend the matter. 

• The department the subject of a claim concerned has failed to respond to 
the Solicitor General's request for instructions on the receipt of a. Notice of 
Claim. The Solicitor General as a result has been unable to respond to 
Court action and advises the Court accordingly - more often, takes no 
action at all. 

• The Solicitor General because of error, or inadequate staff failed to 
respond to the notice of claim or court action within the time allowed by 
the Court rules. 

The Commission is satisfied that failure by State agencies to react to notices of court action 
has been and continues to be a breakdown that compromises the States Law officers' ability 
to respond to such claims. At the same time totally inadequate legal staff numbers of the 
Department of Justice and Attorney General continues to compound the failure of State 
response. 

But notwithstanding these enormous operating difficulties the failure to respond at all has 
been exacerbated by the failure of the State law officers, Attorney General and Solicitor 
General, to ensure that conceded liability did not also result in unchallenged assessment of 
damages. That is, even though obliged to concede judgment on liability no action or 
adequate measures were taken to record or report the lack of response to a claim or offer 
even token representation to ensure a diligent assessment of damages as provided by the 
court rules, and as the Government by Directions required. 



25 



(d) Breach of Duty 

The failure or inability to provide a defence to a claim does not end the obligation of State 
lawyers to protect the interests of the State. With liability conceded, the obligation to prove 
actual damage shifts to the claimant and there remained the duty of the State lawyers to 
protect the interests of the State by ensuring that any award be strictly proved. The failure 
to do this demonstrates the fundamental breach of duty on the part of those Statejawyers 
who undertook such settlements on an assumption of their own authority. Having failed to 
defend a claim, whether for lack of instructions or otherwise, they nonetheless took upon 
themselves the settlement of those claims without instruction, knowledge or detail of the 
claim from the agency concerned. 

No credible reasons were advanced by State lawyers for negotiating setdement of loss 
without actual evidence and without complying with the Public "Finances (Management) Act 
and or NEC directions or consultation with or instructions from Agencies concerned. 

The assumption by the State lawyers of the role of determining the extent of damages 
payable by the State was not only unlawful but a fundamental breach of duty of lawyer to 
'client'. Lawyers advise, they do not decide the fate of the client. 

(e) Default Judgments 

Claims not defended by the State have resulted in the Court granting judgment by default. 
A Default Judgment - converts any writ from an untested claim that should have been 
proved in Court by cogent evidence, into a judgment debt against the State with only the 
amount of the damages to be ascertained. 



26 



Default judgments are granted to a claimant under Court Rules of procedure. If no action is 
taken to defend within the set time for defence the right to defend is lost. 



The rationale of the default rules of the National Courts is that in failing to defend 
an action in time or according to the rules, the defendant (and that includes the 
State) is conceding that it has no defence or that it has no interest in testing its 
liability to a claim. With default judgment there is no court assessment or decision 
on the facts of the claim. 

In a recent National court decision in WS 1232/98 in Kapil -vs- Police & The State (13 July 
2007) Justice Lay said: 

'The effect of the entry ofjudgmenfor liability, is that it resolves all questions of liability for the matters 
pleaded in the statement of claim. Once default judgement is entered the 
facts as pleaded and their legal consequences in terms of establishing the cause of action as 
pleaded must be regarded as proven. The role of the trial judge on an assessment of damages is simply to 
peruse the statement of claim and be satisfied that the facts and cause of action are pleaded with 

reasonable clarity. If he is so satisfied, then liability should be regarded as proven. " 

Claims have thus been legitimised, without any challenge or question as to whether they 
were founded on fact or fiction. 

But once the orders by default have been obtained, - even with orders for damages to be 
assessed as required by the National Court Rules, - control of the further proceedings does 
not rest exclusively with the Court, because it is open to the parties to determine those 
damages themselves. Accordingly the orders for assessment of damages by the Court, have 
most often been by- passed where the claimant and State officials agree to a compensation 
figure themselves. They thus 



27 



avoid a court assessment yet obtain the court seal of authority by filing a consent order for 
endorsement of the negotiated sum. 

It is not surprising therefore that such procedure has been used or misused to enable 
claims that should have failed, to succeed simply by lack of opposition by the State and the 
officers representing the State. Failing to even contest claims has led to massive losses of 
public funds. 

(f) Court and Out-of-Court Settlements 

While there is no legal barrier to the resolution of claims outside of the court process, the 
setdement of them nonetheless requires compliance with the Claims by and Against the State 
Act, the Public Finance (Management) Act and Directions of Government, settlement also 
demands close attention to the statutory authority of the officers delegated to commit the 
State to liability, the proper exercise of authority for the commitment and disposition of 
public funds, and the setdement of these matters in a transparent manner. 

With the National Court now advocating alternate dispute resolution where inter party 
negotiation is essential, clear lines of authority and protocols will be needed if State officers 
are to be engaged in those processes in future. 

From the Commission's inquiries it is clear default judgments followed by consent orders 
on damages setded by State officers out of Court constitute the majority of claims resulting 
in loss to the State. The essential fact is that it is impossible to know whether the claims 
made were genuine or not because the great bulk of them were never tested or defended in 
the Courts to ascertain validity or merit. 

The resolution of claims against the State by the Courts is the public and statutorily 
intended procedure. When the Courts acting upon evidence, decides liability and 



28 



on proven loss, assesses damages, the resolution of a dispute is publicly and 
transparently determined. As this Inquiry has shown too often claims have 
been settled out of court without due process or transparency. The facts of 
claims and the liability of the State under them has been conceded either by 
inaction in failing to defend, or by officers of the Attorney General or Solicitor 
General accepting unproven assertions as fact and claims of damages without 
examination or proof. 

This is exemplified in concession of liability for claims of loss and damage from police raids 
being accepted as fact on the assertion alone, without input from the RPNGPC. Defended 
Court action if any has mostly centred on proceeding for enforcement of the 'negotiated 
setdements' by successful claimants. 

(g) Brief Outs 

The Attorney General is empowered to brief private lawyers/counsel to act for the State. 
This occurs when there is need for particular expertise or the Attorney General is unable to 
undertake the work itself. 

From Finance Department records the Commission has found that over the period 2000 to 
2006 the State incurred liability in payouts of approximately K100 million. Inquiry shows 
there has been no compliance with the Public Finances (Management) Act procedures of 
expenditure for approval prior to engaging in those brief outs. 

The Commission has already made extensive examination of these payments with ready 
assistance from all the law firms concerned except Paul Paraka Lawyers which has been the 
recipient of at least the K41 million in brief out fees for January 2003 to August 2006 noted 
in NEC records. 



29 



' That firm declined to cooperate in the Commission's inquiries inter alia, on the 
i grounds of a National Court interim injunction it had obtained in February 2007 
prohibiting the publication of the report of a Ministerial Inquiry into the propriety 
of brief outs by the Attorney General pending the firm's substantial application for 
Judicial Review. Two (2) years later no action has been taken to progress to that 
Review. It is a sad commentary on the Attorney General's office that it has taken 
no steps to set aside that temporary order for any number of lawful reasons, but at 
the least for want of prosecution. 

The Commission makes further recommendation on brief outs below. The first 
of these must be that the Attorney General forthwith take steps to protect the 
State's interest by action to set aside an order blocking the report and publication 
to the NEC of its own Ministerial Inquiry. 



30 



VI. DEPARTMENT OF JUSTICE AND ATTORNEY GENERAL 

Terms of Reference No. 8 requires the Commission: 

"8. To inquire into the involvement of the Office of the Attorney-General, the Solicitor- General, the 
Department of Finance and the Registry of the National Court ofjustice in the making and payment of 
illegal, false or improper claims or Judgements against the State in the period 2000 - VJuly, 2006. " 

Over the period 2000 to 2006 the representation of the State in litigation has been wholly 
inadequate. 

A major single cause is clearly that the State over this time has failed to maintain its law 
office with a staff even remotely adequate for the enormous workload the legal advisor of 
the nation has to undertake. 

The present caseload of the Attorney General is reported at 1 1 ,000 claims against the State. 
That represents some two thirds of the whole National Court workload. 

A litigation staff of not more than the present 11 lawyers over the period has been quite 
unable to cope with such numbers. 

The resulting failure to provide proper, timely representation of the State has led to 
castigation of officers by the Courts and loss of reputation for the Department. 

Lack of ability to respond has also caused the briefing out of substantial numbers of cases 
to the private bar — notably without compliance with the Public Finances (Management) 
Act - to do the job that the Department was unable to perform. 



31 



During the 2000 to 2006 period, Department of Finance figures show and NEC records 
confirm that the State incurred some K10 million each year in excess of the Department of 
Justice and Attorney General budget in payments of costs to law firms. Application of 
even a fraction of such expenditure on Department of Justice infrastructure could have 
done much to ensure an effective and operational government law office. 

Lack of competent and effective professional leadership throughout the period has also 
been a significant factor in the failure of the Department to perform. 

There has been confusion and dispute over the roles and authority of Attorney- General, 
Secretary, and Solicitor General as to who holds these positions and when. 

The provision that a Minister of Justice with a legal qualification assumes the position of 
Attorney General and Principal Legal Adviser to National Executive Council has only 
added to the confusion as to whether he/she is acting in a political, administrative or 
professional capacity. 

The confusion amongst these officers is shown in the litigation that has occurred between 
Attorney General and Solicitor General, and recently between the Minister Attorney 
General and the Secretary. 

This has been detrimental to the reputation of the Department of Justice and Attorney 
General and more particularly the morale of officers concerned. 

It has been in this climate of confusion and inadequate supervision that the capacity and 
integrity of the Department has deteriorated such that error and breach of duty has been 
able to flourish without restraint. 



32 



The Commission considers that the assumption of the professional and administrative roles 
with the political duties of the Minister diverts the Department from its core function of 
providing competent professional legal advice and protection of the interests of the legal 
interests of the State. It also raises a conflict with Section 148 of the Constitution which 
states that a Ministers political responsibility does not extend to direction or control of the 
Department of his portfolio. 

The Commission therefore recommends that the Attorney General Act be amended to 
provide for a competent experienced professional lawyer appointed on recommendation of 
the Judicial and Legal Services Commission. 

A. Department Restructure 

The Commission is aware that the planned restructuring of the Department detailed in the 
White paper of 2007 endorsed by the Government deals comprehensively with needed 
reform to overcome the issues raised here. The Commission, with respect, also endorses 
such plans. 

But two years later the needed restructure is significantly incomplete with staffing still 
inadequate and the response to legal challenge to the State spasmodic. 

The Commission recommends that urgent inquiry be made into the failure of 
implementation of these reforms to the Department. 

B. Attorney General 

The office of Attorney-General 'is established under the Attorney-General Act T989 . Under Section 
7 of the Act, the Attorney-General is the principal legal adviser to the National Executive 
Council and head of the Department of Justice and 



33 



Attorney General. As principal legal advisor, he is required to tender legal advice and 
opinion to the National Executive Council in accordance with Section 8. 

The Attorney General is the sole representative of the State in legal matters and is the 
nominal defendant for all Claims Against the State. He has such authority as is delegated 
to him by the NEC. This authority does not extend to grant him sole independent 
authority to decide liability or the extent of compensation that the State may be 
responsible for. He is governed by the Attorney General Act which requires him to act on 
instructions of the NEC, the government of the day. He has no authority to commit 
unbudgeted funds. He is also like everyone dealing in disposition of public funds, or 
dealings for goods or services, subject to the requirements of the Public Finances 
(Management) Act. 

This is highlighted in his authority to brief private law firms/counsels to act for the State. 
Inquiry shows no compliance with the PFMA as to the determination of fees. During the 
2000-2006 period this has resulted in the State incurring payments of some K10 million 
each year over and above the Department of Justice and Attorney General annual budget. 
There has been no provision for such brief outs in budgets over the period. Those sums 
have provided a sure income for small law firms which have now grown on State business 
to 5 and 10 times the staffing of the Justice Department. 

C. Solicitor General 

Hie Solicitor General by the Attorney Generals Act is appointed the advocate of the State, no 
more than that. He is not given any authority beyond that of an advocate. The Solicitor 
General is certainly not authorised to decide the State's liability and damages under any 
claim. He is the lawyer appointed to represent the State in litigation, tasked to promote and 
protect its interests. Like any lawyer representing a client he must act only on instructions 
and his instructions can only 



34 



be given to him by the Attorney General who in turn must act on instructions 
of Government. 

In fact inquiries in the matters examined by the Commission show that Solicitors General 
over the period have in fact assumed to themselves, the authority to decide liability and 
compensation, to the detriment of the State. And quite apart from the propriety of those 
determinations, the decisions themselves demonstrate fundamental lack of professionalism, 
competency and appreciation of applicable law. 

In all the cases examined so far, it has been clear that quite apart from effective, technical or 
procedural defences such as time bars or breach of statutory process, which of themselves 
would have precluded a claim, most cases examined have demonstrated an obvious defence 
on the merits that was never pursued. It demonstrates an urgent need for senior experienced 
litigator to hold such a pivotal position. 

The office of the Solicitor General requires a practising lawyer of experience and recognised 
ability. The qualifications are similar to that of a Judicial officer and certainly his role 
involves knowledge and practise of law comparable to judicial officers. There is a need for 
such a qualified Solicitor General today. To ensure appointment of such an office-holder the 
Commission will recommend that the Solicitor General be appointed on the 
recommendation of the Judicial and Legal Services Commission. 

D. State Solicitor 

There is no statutory provision determining the powers and functions of the State Solicitor 
who has nonetheless functions as solicitor advising on non-litigation matters. As head of the 
civil and commercial section of the department of the 



35 



Principal Legal Adviser, it is appropriate that the State Solicitor's functions be authorised 
by statute. Recommendations for this appear below. 



36 



VII. DEPARTMENT OF FINANCE 



A. Introduction 



Terras of Reference number 7 requires the Commission: 



"7. To inquire into the role oj the Department of Finance in screening all claims for payment by the 
State and detecting and rejecting illegal, false or improper claims, to establish the Extent of Department 
responsibility in this regard and conclude whether the Department of Finance has complied with these 



The Department of Finance is the Department of State responsible for the management of 
the finances of the State. The Department is responsible for the administration of, and is 
itself regulated by the Public Finances (Management) A.ct 1996 (PFMA). Section 117 makes 
provision for the issue of Financial Instructions to achieve desirable budgetary and financial 
controls and enforce prudent financial management procedures. 

The Inquiry has found that the Department has failed those responsibilities, instead showing 
scant respect for the processes of the Public Finances (Management) Act by constant 
breaches of the Act, Regulations and Financial Instruction. 

Inadequate accounting systems and controls which prevent proper recording of financial 
transactions, are compounded by inadequate filing and storage of financial records. These 
errors have been recorded annually by the Auditor General but never addressed by the 
Secretary or Senior management. Most importantly the Department has ignored specific 
directions of government instead, disposing of funds budgeted by Parliament as if the State 
was not there 



37 



B. History 

The Department over the years has had several restructures under different departmental 
heads. The Department was re-structured and its name changed from Department of 
Finance to Department of Finance & Corporate Affairs, Department of Finance & 
Planning and Department of Finance & Treasury. 

In 2002, the department was divided forming two individual departments, the Department 
of Finance and the Department of Treasury managed by two separate departmental heads. 
The Department of Finance is currently headed by Mr. Gabriel Yer while Mr. Simon 
Tosali is the Department head for Treasury. Both Departments operate under the Public 
Finances (Management) Act (PFMA). 

The Department of Finance is tasked to ensure the enforcement and implementation of 
financial control measures especially on revenue and expenditure so as to avoid any 
spending decisions that may result in wasteful and extravagant expenditure. 

The Department of Treasury on the other hand ensures that the annual appropriation by 
Parliament provided for under the Annual Appropriation Act remains intact, and provides 
the budgetary framework which public funds are collected and disbursed. 

C. Inquiries 

(a) The Department Structure & Responsibilities 

There are two divisions within the Department - Operations and Strategy - headed 
by Deputy Secretaries who report to the Secretary. Below the two Deputy 



38 



Secretaries are line managers known as First Assistant Secretaries (FAS) who have various 
divisions within their area of responsibilities. The various divisions are controlled by 
divisional managers known as Assistant Secretaries (AS). 

The Operations Division has the following sub-divisions: 

> Corporate Services - this includes Human Resource, Financial Training and 
Administration Services. 

> Non-Tax Revenue — this includes Social Law & Order, General & Administration 
and Economic Infrastructure 

> Cash Management & Expenditure - this includes Cash Management, Expenditure 
and Accounts Payable. 

> Provincial & District Treasury Financial - this includes Highlands, Southern, New 
Guinea Islands and Momase. 

The sub-division of interest to the Inquiry is Cash Management and Expenditure. This sub- 
division has the responsibility of processing the setdement of lawful claims of claims against 
the State. The Strategy Division comprises of the following sub-divisions: 

> Accounting and Frameworks - this includes Public Accounting, Trust Accounting, 
Accounting F/W, and Payroll Accounting. 

> Internal Audit, and Compliance - this comprises of Audit, Investigation, Compliance 
and System Development. 

> FMIP Program - this comprises of IFMS Coordinator, Financial Management ADB, 
Provincial FMIP Ausaid and Provincial Capacity. 

> Information and Communication Technology - this comprises of Technical Services, 
Core Systems Support, PGAS Support and Payroll Support. 



39 



Here the sub-divisions of interest to the Inquiry are the Accounting & Framework and 
Internal Audit & Compliance Divisions. These sub-divisions are responsible for ensuring 
that the claims against the State are processed in compliance with the PFMA and the 
established procedures in financial instructions issued by the National Executive Council 
and Finance Secretary from time to time. Since 2002, the organizational 
structure/ functions may have varied from time to time. 

(b) Public Finances (Management) Act 1995 ("PFMA") 

The PFMA is the legislative authority for the management of all Government monies 
including those relating to Provincial Governments and Local Level Governments as 
required under the Organic Law. In general, receipts of monies by Government are dealt 
with through the Consolidated Revenue Fund (CRF), and Payments are made from this 
Fund, unless there is specific approval by the Minister under circumstances provided for 
in the Act to use a Trust Account. The PFMA also deals with all aspects of fund 
management including record keeping. The main points of the PFMA are as follows:- 

> Defines the responsibilities of those responsible for financial management 
including the Minister, Secretary and other Departmental Heads as well as 
Accountable Officers. 

> Defines the Public Accounts Trust Fund and CRP for handling of all public 
monies. 

> Provides for the annual National Budget, allows for transfers between budget 
head within limits set by the annual budget. 

> Provides for warranting of expenditure in accordance with parliamentary 
appropriations. 

> Provides for issuance of Financial Regulations. 



40 



> Regulates tender procedures for procurement of goods and services by- public bodies. 

Part II of the PFMA defines the responsibilities of the Minister and the Department Head. 

The Minister is responsible for — 

(a) the supervision of the finances of the State so as to ensure that a full account is 

made to the Parliament of all transactions involving public monies; and 

(b) the supervision of the finances of public bodies; and 

(c) the formulation of the National Budget and overseeing its implementation on 
behalf of the National Government. 



The Act further states that as soon as practicable after the end of the first, second and third 
quarters of each fiscal year, the Minister shall publish in the National Gazette a summarized 
statement of the receipts and expenditure of the Public Account during the fiscal year up to 
the end of that quarter. The Minister is further tasked after the end of each fiscal year to 
prepare a detailed statement of the receipts and expenditure of the Public Account and send 
it to the Auditor-General for audit. 

The Act states that the Departmental Head has control and direction of all matters relating 
to the management of the financial affairs of the State, subject to specific directions given to 
him by the Minister. 

Both Department of Finance and Department of Treasury are expected to fulfil their 
missions in the context of the PFMA, Financial Instructions, Finance Regulations, the 
Appropriation Act, and all laws relevant to their function. 
The common gazetted functions are to: 



41 



> Exercise responsibility in managing all policies, regulations and laws 
pertaining to die collection and disbursement of public monies; 

> Administer and provide advice on debt management and foreign aid; 

> Formulate and administer Government's annual estimates of revenue and 
expenditure. 

The payment procedures for the Department of Finance are stipulated under 
Financial Instructions Part 5 and Public Finance Management Manual Section 28 
to 33. 

The Commission notes that the PFMA does not have any specific provision for 
claims against the State. The Commission recommends that the Financial 
Instructions and Finance Management Manual be reviewed to incorporate the 
requirements of Section 47D of PFMA and Section 2A of the Claims By & Against 
the State Act. 

(c) Budget Process 

All State entities are funded annually through a budget. The process of budget 
formulation is by way of consultation between State entities entitled to funding and the 
Treasury Department. The budget processes for the Department of Finance are issued 
under Financial Instruction Part 4 & 5, Section 22 to 25 of the PFMA. 

Like all government departments and agencies, Department of Finance budget is 
determined by each divisional budget requirement being submitted to the Top 
Management and Administrative Services Division to compile the departmental annual 
budget. Divisional budget estimates for the next fiscal year (1 January - 31 December) are 
based on the estimates being appropriated in aggregate by Department of Treasury prior 
to compilation of the National Budget, which takes place annually between July and 
November of each fiscal year. 

42 



The Budget Division of Department of Treasury consolidates all government departments 
and agencies budget estimates into the National Budget, which is appropriated against the 
Consolidated Revenue Fund and incorporated into the Appropriation Bill. The final 
National Budget is submitted to the National Parliament by the Treasurer as an 
Appropriation Bill for Parliament to consider in November session of Parliament each year. 
Once the National Budget is passed by the Parliament as an Appropriation Act, the Minister 
for Finance endorses a Minister's Warrant authorizing the Secretary for Treasurer to issue 
Warrant Authorities signifying availability of funds to all government departments/ agencies 
as stated in the schedule of estimated expenditure for the fiscal year of the Appropriation 
Act. 

Warrant Authorities are then endorsed by the Secretary for the Department of Treasury and 
issued to heads of government departments and agencies to commit or pay out funds 
pertaining to their appropriation. 

Warrant Authorities are issued usually on a monthly basis, and the amount on Warrant 
Authorities are based on the availability of cash. All Warrant Authorities issued by the 
Budget Division are in triplicate as follows: 

> The Original is sent to the head of the department/agency 

y The duplicate is sent to Public Accounts Division (Cash Management Division) to 
liaise with Bank of PNG to transfer the cash equivalent on the Warrant Authority to 
the stated beneficiary. 

> The triplicate is retained by Department of Treasury to update the warrant control 
registers kept by the Budget Division. 

The Department of Finance administers and maintains only two expenditure allocations: 

> Division 206 - recurrent expenditure items involving the department's operational 
costs except for personnel emoluments. 



43 



> Division 207 - Miscellaneous Vote consists of miscellaneous government expenditure 
items. 
The single biggest budget appropriation made annually is the Miscellaneous Vote 207 out 
of which payments are made for a wide range of government expenditure items. Given the 
cash basis of accounting, this account is specially maintained to cater for unpaid liabilities 
of the State in respect of goods and services rendered in prior year. 

(d) Accounting Principle 

The Government accounts are maintained on a Cash Basis. Receipts and expenditure are 
brought to account only when money is actually received or when a payment is made. 
Costs of goods and services received in one year are brought to account in the year of 
payment and not spread over the following years when they may be used. Similarly, if 
revenue receivable in a year are not actually received in that year, its accounting will be 
deferred to the year it is received. 

A distinguishing feature of the Government financial system is the concept of fund 
entities, which is derived from the fact that the legislature controls public finances. 
According to the fund entities concept, Government revenues and loans are paid into a 
fund known as the Consolidated Revenue Fund from which payments made. 

If an obligation incurred during a year is not met during or before the close of the year, it 
must be carried forward and met from the following year's Parliamentary authorization 
(Appropriation Act). It must not be met from unspent revenues of the year in which the 
obligation was incurred. 

Appropriations Acts are passed by Parliament annually. There are special dispensations 
that allow for revolving fund operations of a quasi-commercial nature, usually under 
trustee arrangements. Under these arrangements, the 



44 



Parliamentary Appropriations, either for start-up assistance in the form of initial working 
capital or budget subsidies for operations, are paid into a separate fund known as Trust 
Fund and the balances under this fund are carried forward from year to year. These also 
include monies for third parties held in trust that will be repaid at a later date. The monies 
raised by such activities get paid into the Trust Fund and are subject to vigorous control and 
expended for the purpose as intended. 

The Government accounts are prepared on a Cash Basis as compared to the Accrual Basis 
of Accounting practiced in the Commercial Sector. Cash basis of accounting is based on 
actual cash received and actual cash paid. This system does not make provision to capture 
outstanding revenues, liabilities and commitments as and when they occur. 

(e) Accounting Information System 

All State owned entities use an accounting information system called Papua New Guinea 
Government Accounting System (PGAS). PGAS is used by all Government Departments 
and State entities to record all transactions involving public funds. The PGAS has in total 
twenty one modules which are programmed in line with PFMA and Financial Management 
Manual. 

Most State entities control their finances and maintain records by operating only four 
ledgers, namely, Revenue Ledger, Expenditure Ledger, Trust Ledger and Cash Book Ledger. 
These four ledgers will be able to produce monthly bank reconciliations and cashbook 
detailing receipts and payments for any given period. The transfer of funds from one vote 
another vote is prohibited under Section 27 of PFMA. 



A key feature of PGAS is that a cheque will not be printed unless there are funds available in 

the relevant vote. This suggests there is an inbuilt control mechanism 

45 



however the system is open to manual journals which can be posted to process cheques. 



(f) Payment Procedures 

In evidence to the Commission from Secretary Gabriel Yer and former Secretaiy Thaddeus 
Kambanei, they described the processes and procedures as follows; 

> The claim is forwarded by the Attorney General under cover of a letter to the 
Finance Secretary requesting setdement of the claim. 

> The Finance Secretary would then make appropriate footnote on the letter and 
pass it onto Deputy Secretary Operations for the amount to be included in the 
schedule of Court Ordered payment. 

> FF3 & FF4 is raised by Commitment Clerk based on availability of funds, 

> FF3 signed by Commitment Clerk, 

> FF3 & FF4 is signed by Financial Delegate, 

> FF3 signed by Section 32 Officer, 

> FF3 & FF4 are pre-audited by the Internal Auditor, 

> FF4 examined by Examiner to ensure FF4 is fully completed and signs to verify 
that, 

> FF4 is verified by Certifying Officer and also signs FF3, 

> FF3 & FF4 is verified by the Paying Officer known as Audiorising Officer just 
prior to cheque print, 

> Pay Office cheque machinist draws cheque, 

> Cheque printed verified against the FF3 & FF4 by Paying Officer, 



46 



> Cheque distributed to authorised personnel for distribution - in case of 
claims against State, the cheques are given to the Solicitor General. 

> If there is any query, then the FF3 & FF4 with the supporting documents 
are sent to the relevant officer to address the issue raised or reject the claim 
totally. 

(g) Filing and Storage of Records 

The Finance Department being responsible for State's finances is expected to 
produce and maintain a filing and storage system that is accurate and secure (both 
in electronic form and hard copy). 

Payment vouchers were filed in cheque number sequence with ten (10) in a batch 
or one arch file. Each batch would start with the lowest number at the bottom and 
ends with the highest at the top of the file. 

Payment vouchers which all originate from the Finance Cashier Branch are stored 
initially on the first floor and are then moved to storage in a make-shift Storage 
Room located in the carpark on the lower ground floor of Vulupindi Haus. After a 
period of 2 years, the files are moved over to a rented building in the Gordons 
industrial area for the remainder of the statutory period. That building is not 
fenced, there are no security grills on the front entrance and all windows. Files are 
stored loosely on top of each other in arch lever files in no organised manner. The 
building has no lighting, air conditioning and proper ventilation. There was no 
electricity connection. 

There was no register of the documents kept at each location. Whenever officers 
of the Department request documents, files are removed and taken to the 
Vulupindi Haus. There was no register or logbook that recorded the movement of 
files and documents. 



47 



The Commission in its own searches found that many payment vouchers were 
either removed or misplaced. 

The C ommission noted the following; 

• The tiles were not numbered in any numerical order to correspond to the 

cheque sequence number. 

• No register was kept on site to record movement of files or vouchers within 

that file. 

• No staff permanendy allocated to maintain and monitor the movement of 
documents. 

This deplorable filing and storage system appears to have been in existence for many years 
and there was no indication as to whether steps were being taken to remedy the situation. 

(h) Integrity of the Accounting System 

The Commission notes that the PGAS Accounting System is inadequate to accurately 
record transactions involving public funds. We have not been given access to establish the 
adequacy of this information system however from the available evidence and review of 
Auditor General's Report in the period covered by the Terms of Reference we can 
confirm that the information produced from this system is inaccurate and unreliable. The 
major single cause of this has been insufficient and inaccurate input of data. This 
effectively means that the Finance Department has not maintained proper accounting 
records of the funds it administers and therefore has not during the period produced to 
the Government accurate financial statements for future planning and assessment of 
programmes implemented. 



48 



The Commission's requests for hard copies of the financial statements have not been met. 
The Department explained that to print these statements would be cumbersome. Instead an 
electronic copy of the cash book was produced to the Commission. 

The electronic cashbook contained data obtained from PGAS exported to a spreadsheet. 
The Commission was unable to ascertain the completeness and accuracy of the electronic 
cashbook. 

The cashbook was meant to record all payments out of the Finance Department however 
the Commission notes there are some significant errors and inappropriate entries noted in 
the cashbook. These include; 

A Cancelled cheques being credited into wrong votes, 

> Cheques raised were denoted in the Cashbook as being cancelled and replacement 
cheques issued were presented for payment yet the original cheque was also 
presented for payment, 

> Refund cheques being credited into wrong votes, y Stale 

cheque being carried as yet to be presented,- • 

y Journal entries entered into cash book for the purpose of balancing the books at year 
end with no basis in accounting. 

The Auditor General's Audit Report for the relevant periods covered by the Terms of 
Reference has in each year raised significant issues with respect to how the Department 
accounts for Public Funds. Some of the main issues raised by the Auditor General over the 
years include; 

A Late preparation of Public Accounts for Audit by the Auditor General; 



49 



> Numerous manual journals were processed at year end, most of which had 
no accounting basis for the journal to be raised 

> Non-reconciliation of key accounts including non-clearance of un-presented 
cheque which have built-up over the years, 

> No records of Trust Accounts and their reconciling balances at year end, 

> Transfer of Appropriation in direct violation of Section 25 of PFMA, 

> Lack of proper accounting resulting in various overdrawn accounts, 
These audit issues were raised by the Auditor General over many years but were 
continuously ignored by the Secretary. 

The Commission finds that the Secretary and the senior officers of the 
Department have failed miserably to maintain proper accounting records. 

(i) Improper and Illegal Sourcing of Funds to Settle Claims 

The Commission has noted that in the period 2000 to 2006, funds for settlement 
of claims against the State were drawn from various sources including; 

> Court Order Appropriation - lawfully available 

> Trust Accounts - not lawfully available; and 

> Other votes - not lawfully available. 

The table below shows budgeted appropriations for Court Orders (Column B), the 
actual amounts paid (Column C) and the amounts sourced from votes containing 
funds appropriated for other purposes. 



A-Year 


B 

Appropriated 


Amount 


C - Amount Paid to 
Settle Claims 


D - Funds Illegally Sourced 
Settle Claims 


to 


2000 





K38,646,701 


K38,646,701 


2001 





K44,835,549 


K44,835,549 


2002 


K14,100,600 


K89,462,673 


K75,362,073 


2003 


K24.1 74,200 


K70,666,401 


K46,492,201 



50 



2004 


K90.03 1,200 


Kl 52,428,905 


K62,397,705 


2005 


K56,986/700 


K121,716,446 


K64,729,746 


2006 


**K37,352,750 


K54,834,610 


Kl 7,481,860 


Total 


K222,645,450 


K572,591,289 


K349,945,839 



** Halt year appropriation used in this analysis. 

The above analysis clearly shows that the Finance Secretary illegally sourced funds over and 
above the amounts appropriate in the annual budgets to settle claims. For the period covered 
by our Terms of Reference, just under K350 million was sourced votes not provided for in 
the annual budget. 

In 2000 and 2001 there were no allocations under the Appropriation Act for settlement of 
claims against the State. However, the Secretary illegally sourced well over K83 million to 
settie claims against the State. 

We have not been able to establish any genuine reason why excessive claims for subsequent 
periods were not reported to Government or properly factored into budget projections to be 
brought to the attention of the Parliament. The Finance Secretary would have been well 
aware of the magnitude of claims that were being settled or awaiting settlement and it would 
not only have been prudent but necessary in seeking realistic estimates to be included in the 
ensuing budget. The Commission finds that the reporting of realistic provision for claims 
would have prompted NEC and Parliament to demand explanations as to why such large 
appropriation was necessary particularly when the amount if appropriated would have been 
well over the amounts being allocated for service Departments such as Health and Justice. 

The graph below is an illustration of the disparity in annual budgetary allocation of funds for 
the Health and Justice sectors as against actual payments for claims and court judgements 
against the State. 



51 




2000 2001 2002 2003 2004 2005 



Year 



| Because of this failure to report, it can be concluded that over the period discussed 
above, the NEC and Parliament have been authorising annual budgets without being 
aware that such budgets did not capture the actual liability for payment of claims against 
the State. 

The various accounts from which funds were illegally sourced during the period covered 
by the Terms of Reference are as follows; 



Account Code 


Description 


Amounts Paid 


207 


Miscellaneous 


K205,930,732 


460 


Trust Suspense Account No. 2 


K130,608,570 


410 


Cash Adjustment Account 


K6,986,017 


216 


Internal Revenue Commission 


K5,200,025 


577 


SH Provincial Government 


K2,239,915 


589 


WNB Provincial Government 


K684.636 


573 


Central Provincial Government 


K334,370 


221 


Public Service Commission 


Kl 11,054 


258 


State Enterprises 


K21 0,000 


252 


Dept of Lands & Physical Planning 


K211.003 


299 


Debt Servicing Vote 


K260.581 


571 


Fly River Provincial Government 


K420,760 


579 


WH Provincial Government 


K49,031 




Total 


K353,246,698 



52 



The Commission has learnt that the Department has an undetermined number of trust 
accounts which are unaccounted for and it is expected that funds may have been sourced 
from there to settie claims as well. From our review it can be seen that the Secretary has 
deliberately set out to pool funds from sources other than the designated budgeted 
appropriation. Former Secretary Kambanei offered the explanation that since the settlements 
were related to claims against the State, there was no need to comply with PFMA. 

The actions of the Secretary breached Section 5 Subsection (1) (d) of the PFMA. 

A "Suspense" account or a "Cash Adjustment" account are by accounting definition only 
temporary accounts holding reconciling items to be cleared at year end. An example would be 
the holding of funds from third parties temporarily such as court bail, child maintenance etc. 

There were five (5) types of book entries made by the Secretary to accumulate the funds in 
the TFS Account No. 2 as well as the Cash Adjustment Account. Funds were sourced to 
build up balances in these accounts as described below: 

Repaid Cheques 

Repaid cheques were credited to TFS Account No. 2 instead of being credited back to 

the respective votes. 

Cancelled Cheques 

Cancelled cheques from other votes were incorrectly credited to TFS Account No. 2. 

Stale Cheques 

Stale cheques credited to TFS Account No. 2 instead of being credited to Revenue. 



53 



Journal Entries. 

Unspent fbnds at year end were transferred to TFS Account No. 2 by means of 

Journal entries instead of funds being transferred to consolidated revenue. 

District <& Provinci al S upport Grants 

Cheques raised for District Support Grants and Provincial Support Grant were 
cancelled and credited to TFS Account No. 2 instead of being credited back to the 
respective Votes from which the cheques were originally drawn. 

The financial implications are: 

• that total expenditure under the respective Votes were overstated to the extent 
of the amount transferred to TFS Account No. 2. 

• If such amount transferred to TFS Account No. 2 had remained in their 
respective Votes, those amounts would have been automatically taken to 
Consolidated Revenue at year end. 

• Further, the revenue for the following year is understated to that extent, 
(j) Establishment of Trust Fund Suspense Account No. 2 

This account was established by a Trust Instrument signed by Hon. Andrew 

Kumbakor, then Minister for Finance, Planning and Rural Development on 29* May 
2002. 

Eleven (11) days later (i, on 10 th June 2002), Mr. Thaddeus Kambanei, then 

Secretary for Finance, Planning and Rural Development sought legal clearance on the 
establishment of the account. 



54 



Four (4) days later (i.e. on 14 th June 2002), Mr. Francis Damem, then Attorney General& Secretary for 
Justice advised the Mr Kambanei "...In my view, the Trust Deed dated 29 th May 2002 was lawfully established 
pursuant to section 15 of the Public Finances (Management) Act, 1996". 

Mr. Kambanei in his evidence before the Commission stated that it did not matter whether 
he obtained legal clearance prior to or after the Minister had signed the Trust Instrument 
establishing the account. In a rather carefree manner, Mr Kambanei said he was "comforted" 
by the fact that the Attorney General Mr Francis Damem had given clearance to the 
establishment and operation of the account. 

The Commission heard evidence from Mr. George Minjihau, State Solicitor as to the 
establishment of this account. He expressed surprise when told the account was established 
without prior legal clearance. Mr. Minjihau confirmed that the process for consultation was 
important and he referred to Financial Instructions Manual Part 4.5 which requires prior 
clearance of the "State Solicitor". 

Further, Mr Minjihau also reaffirmed the requirement that such "Trust Instrument" must 
clearly state the purpose for which it is established and the source of funding for the account. 

These are serious instances of non-compliance by Mr Kambanei. Further, Mr Damem was 
wrong in giving legal clearance to Mr Kambanei's unlawful actions. 

Part 1 Report of the Auditor General for 2005 on the Public Accounts of PNG has 
addressed its concerns on the creation of the account. The Auditor General makes the 
following conclusion at page 141 of the Report: 



55 



. The operation of Trust Account No, 2 has not been in accordance mth the Trust Instrument that has 
facilitated the payment of irregular and unbudgeted 'payments. 

® Prudent accounting practices has been ignored in the manner that cheques have been banked and 
cancelled resulting in Appropriation for former years being understated by K13.4 million and 
recurrent expenditure and trust accounts expenditure being overstated by K65.4 million. 

• The inability to reconcile the balance is an indication of poor record keeping by the Department. 

The response by the Department to that conclusion was, "The Minister notes the 
conclusion. As stated the Trust has now been revoked by the Minister in response to 
concerns about the way the trust was being used." 

The Commission has examined the Finance Cash Book which confirms that the sum 
total of K130 million was paid out of the Account during the period 2002 to 2006 despite 
the ministerial assurance to the Auditor General that the Trust Deed was revoked. 



(k) Mr. Thaddeus Kambanei's Evidence 

Mr. Thaddeus Kambanei served as acting Secretary from 2001 to 2002 and appointed 
Secretary in 2002 and terminated in 2006. In his evidence (Transcript page 1802) he 
stated that he started his career with Bureau of Management Services in Wewak in 1977 
as a registration clerk. He progressed through the Department to become Secretary. In 
his evidence Mr. Kambanei disclaimed any responsibility for processing of payments for 
setdement of claims. He stated that he had Officers below him who were responsible 
for processing of claims within the requirements of PFMA. He had stated in his 
evidence (Transcript page 1810) 



56 



that even if he wrote a notation such as "approved, please process" did not mean 
that it was a directive from him for Officers to process the payments. 

The Inquiry found that Mr. Kambanei tried his level best to disassociate himself 
from many questionable and fraudulent payments processed during his tenure in 
office. He stated that Deputy Secretary Gabriel Yer would have been responsible 
for these claims. The Commission finds Mr. Kambanei's evidence to be 
misleading, evasive and not credible. At all material times he was responsible for 
directing his staff to process setdement of claims against State. 

The Commission further noted that he pooled funds improperly and illegally to 
settle these claims and it was evident that he was in control and knew exacdy what 
he was doing contrary to the PFMA and the Appropriation Act. 

(1) Conduct of Inquiries 

The Inquiry has had limited success in obtaining information and explanations 
from the Finance Department. This lack of co-operation commenced with 
Secretary Gabriel Yer and continued with his senior Department officers. The lack 
of co-operation clearly indicated the department was aware of its failure to. 
maintain and produce accurate and authentic accounting records. Further, the 
Department was unable to explain and account (adequately or at all) for its 
management or indeed mismanagement of vast amounts of public monies. 

Senior officers of the Finance Department have at all times been difficult even 
combative with the Commission. This was a major disruption to the work of the 
Commission. 

• Letters sent to Mr. Gabriel Yer for specific information or data were either 
not attended to on a timely basis or at all. 



57 



The Commission then held numerous meetings with Mr Yer and his senior officers 
to establish a process of document retrieval useful to the Commission and with 
minimal disruption to the Department. During these meetings Mr Yer gave 
undertakings to co-operate and provide the required data promptly but there was 
no follow through. 

The Commission then summonsed Mr Yer the Secretary and expressed 
disappointment with the lack of co-operation by him and his Department. Once 
again, Mr. Yer repeated his personal undertakings and assured the Commission he 
would take personal responsibility and ensure full compliance with requests of the 
Commission. This was all in vain. 

A total of eight summons requiring 1,325 documents relevant to particular claim 
transactions were served on the Secretary. As at the date of this Report, the 
Finance Department has failed to provide 714 of these required documents. 

The Department advised the Commission that the documents not produced were 
either missing from records or were never in existence at the time of raising cheque 
for claims against the State. 

Investigators attending on the Department were continually told nothing could be 
produced or released without specific authority of the Secretary or his authorised 
officer who were never available to assist in this regard. 



The bulk of the information requested from the Department was obtained 
in the last months of the Inquiry when Commission staff attended at the 
Department to search the files and locate the documents required. 



58 



• Attempts to work with the Department staff were largely ineffective as staff would 
turn up late for work and or disappear during the day drastically hampering the 
effectiveness of Commission searches. 

• Significant payments vouchers in relation to suspicious payments had gone missing. 

• There was no acceptable system of filing and archiving of documents. 

(m) Auditor General's Reports 

The Commission also notes the Auditor General chose not to provide a disclaimer of opinion 
on the financial statements despite having raised serious qualification matters. Clearly the 
expressed opinion of the Auditor General was not reflective of the serious matters he himself 
raised. 

D. Common Findings in respect of Claims 

The Commission identified over 500 claims being setded by the Finance Department within 
the timeframe covered by our Terms of Reference from 1 January 2000 to 1 July 2006. The 
Commission's review revealed common anomalies with respect to illegal, fraudulent and 
improper payments. The findings in respect of individual matters are detailed in their 
respective files together with the recommendation for appropriate action to be taken against 
persons involved. The common findings in respect of most matters are as follows: 

(a) Funds illegally sourced from other Appropriation 

Funds to process settlement payments of claims against the State on numerous instances were 
illegally sourced from other appropriation such as the Trust Fund Suspense Account No. 2, 
the Cash Adjustment Account, Arrears Vote, etc. instead 

59 



to the Court Order Vote. The sourcing of fonds from other appropriations to 
process setdement of claims against the State clearly in breach of the 
Appropriation Act and Public Finance (Management) Act and illegal 

The Commission recommends that strict protocols be introduced to ensure 
payment of claims against the State being made only from die funds appropriated 
under the Court Order Vote. 

(b) Failure to comply with NEC Decisions 

As stated above, claims against the State were processed without compliance with 
the NEC Decisions No. NG07/2002, No. 150/2003 and No. 21/2006. 

(c) Preferential basis of settlement of Claims 

The Commission finds that there was no properly established method for the 
processing of payments to claimants. A ad-hoc or "on demand" preferential 
practice appears to have been the norm. This suggests that officers of the Finance 
Department may have collaborated with claimants in securing priority over other 
claimants. 



The Commission recommends that the Department provide a fair and reasonable 
method for the processing of payments. There should be Register of claims lodged 
for payment which should be updated on a timely basis. 

(d) Non-completion of FF3s and FF4s 
The completion of FF3s and FF4s is an essential aspect of internal control in 
processing of payments ki accordance with the Financial Instructions. Non- 
completion or improper completion of FF3s and FF4s is evidence of lack of 



60 



proper internal controls. The Commission firmly recommends that systems be applied 
to ensure that FF3s and FF4s are fully completed for all payments. 

(e) Overpayment of Claims 

Several claims were noted to have been over paid when claims were setded in instalments. 
This indicated a lack of proper internal controls to monitor and manage all claims from 
inception to full payment. 

As recommended above, a register of claims and payments reconciled on a timely basis will 
eliminate this error. 

(f) Overpayment of Interest 

Incorrect calculation of interest has resulted in the overpayment of claims. The Commission 
recommends that appropriate measures be taken to ensure interest is accurately assessed. 

(g) Cancelled Cheques being Presented 

Some cheques being denoted as cancelled in the cashbooks have actually been presented at 
the bank. The Commission recommends that cancelled cheques be crossed out and attached 
to the journal entry form. 

(h) Incorrect narration of Cashbook 

Details of some cheques raised were incorrectly described in the cashbook. As a result, there 
was difficulty identifying payments of claims and in performing proper reconciliation of the 
cashbook transactions. 



61 



(i) Non compliance of Income Tax Act 

All claims for payment were never assessed for tax payable. The Commission 
recommends that processes be established to ensure that IRC is immediately informed to 
assess any tax liability prior to processing payments. The release of payment must be 
subject to clearance from IRC. 

(j) Release of cheques direct to Claimants 

The Solicitor General has the conduct of all claims on behalf of the State. As such, 
cheques raised in payment of claims should forwarded by the Finance Department to 
the Solicitor-General for recording and release to the claimant or their legal 
representative. The current irregular and unco-ordinated procedure gives rise to 
overpayments and the wrongful collection of cheques. 

(k) Department's lack of consultation with other State agencies 

Several claims against other State bodies such as Provincial Governments were setded by 
Finance Department without consultation. This lack of consultation has resulted in 
possible duplication of payments. 

(1) Cheque Clearance 

Many cheques raised were cleared on the same day by the commercial bank and 

Bank of PNG. The same day clearance of cheques creates the opportunity for 

fraudulent payments to be cleared swiftly thus avoiding detection of such 

impropriety which would possibly occur if cleared in the ordinary course (i.e. seven (7) 

working days). 



62 



(m) Payment of Legal Fees without Certificate of Taxation 

Some legal fees claimed by the lawyers of the claimants were settied without 
certificate of taxation. 

(n) Dysfunction of Internal Audit 

Internal Audit Department failed to take appropriate action to prevent fraudulent 
claims from being processed. Internal Audit Department is vital internal control 
measure to an organisation dealing with substantial monies. Its functions are to 
monitor and detect fraudulent transactions to protect public funds. 

The Commission recommends that Internal Audit Department be adequately 
staffed and properly equipped to perform its functions diligently. All claims 
against the State should be pre-audited by the Audit Department prior to cheques 
being raised. 

E. Recommendations 

National Executive Council 

• National Executive Council ('NEC') establish a team of professionals 

comprising of accountants, lawyers and others to immediately conduct a 
review of the Department and make recommendations for appropriate 
remedial actions to be implemented. 

Audit Issues 

> NEC to direct the Department of Finance to immediately address all issues 
raised by the Auditor General in the Reports on the Public Accounts of 
PNG tabled in Parliament since the year 2000. 

y Auditor General to review and report to Parliament on all outstanding audit 
issues raised since the year 2000. 



63 



Systems & Procedures 

• Immediately install and implement a proper accounting and information 
management system that is able to accurately capture and maintain all 
financial transactions of the State and produce reports and records on a 
timely basis. 

• A Section is created within the Cash Management and Expenditure Division 
to cater for all filings and record management of the Department, 

• A appropriately skilled person is appointed with additional staff to take stock 
take of al existing files and establishment of proper filing system, 

• An appropriate building with proper lighting, ventilation, shelving and 
security is secured to store files for the minimum statutory period of seven 
years. 

• Immediately cease the operations of the Trust Fund Suspense Account and 
Cash Adjustment Account. 

• Immediately stop all payments, out of the Arrears Vote for settlement of 
claims against the State. 

• Immediately establish a proper recording system of all claims against the 
State. 



Settlements 

b «pec< to settlement, Ae M„™ g should take pkcepdor » 
drawn to settie claim; 



A /\ 



64 



> Finance Department keep a proper register of all claims received for setdement, 

> Check and verify with external parties such as Solicitor General, Registrar of Courts to 
ensure that the documents submitted in respect of any claim are genuine and there has 
been compliance with the Public Finances (Management) Act ('PFMA') and the Claims By 
against the State Act 1996. 

> All claims approved by be forwarded to the Minister for approval as required under the 
PFMA. 

> Further claims of K1.0 million and above, the Minister should seek NEC approval for 
setdement. 

> the Financial Instructions and Finance Management Manual be reviewed to 
incorporate the requirements of Section 47D of PFMA and Section 2A of the Claims 
By & Against the State Act. 



Referrals 

• Finance Secretary Gabriel Yer be referred under Parts 6 and 14 of the Public Service 
Management Act to the Public Services Commission be referred for further 
investigation in respect of the matters raised above and throughout this Report. 

• Former Finance Secretary Thaddeus Kambanei be referred for further investigation in 
respect of the matters raised above and throughout this Report. 

Review of current management 

• The Departmental head shall immediately review the performance and competence 
levels of all officers of the Department 



65 



Recruitment 



The Department shall recruit qualified and experienced officers to perform 
competently in all functions as required. 

All officers, particularly management, should have the following: 

o undergraduate degree in accounting 

o Associate membership of Certified Practising Accountants of PNG (CPA 
PNG) 

o Clearance from CPA PNG that he/she is fit and proper person for the to 
be employed by the Department 

o Obtain clearance from Police Fraud and Criminal Divisions stating the 
persons considered for employment has no record of conviction and is 
not subject to investigation for possible fraud or other criminal offence 

o Subject all candidates considered for the position of the Secretary to a • 
Interview Committee comprising of accounting (from international 
accounting firms) and legal experts for assessment of their knowledge of 
the accounting standards and relevant laws such as the PFMA. 



66 



VIII. INVESTIGATION REPORTS 



A. Land 



The Commission has examined twelve (12) land related matters and reported on four (4), 
which concern the acquisition of customary land by the State and the management of State 
land through the Department of Lands & Physical Planning. 

With regard to the acquisition of customary land by the State, the Commission has not fully 
investigated the matters to make conclusive findings. On the limited information available, the 
Commission notes all the claims were dealt with by the National Lands Commission and were 
the subject of judicial review by the State before Injia, DCJ (as he then was) in which his 
Honour delivered a ruling on 30 November 2006. Essentially, the Court set-aside the 
assessments made by the National Land Commission as being outside the payment scale as 
prescribed by Schedule 2 of the National Land Registration Act (Chapter 357). 

The identification of lawful claimants and the processes by which such claims were pursued, 
heard and determined are issues that require further investigation. Further, the involvement of 
lawyers and representatives of the claimants needs to be examined. 

As regards the management of State land through the Department of Lands & Physical 
Planning, the matters investigated clearly highlighted the gross incompetence of State officers 
generally, and lawyers within the Solicitor General's office in particular. This highly undesirable 
state of affairs was exacerbated by 



67 



extremely irresponsible and dishonest State officers in the performance of their 
statutory functions. 

Three (3) claims examined by the Commission, which covered all the Terms of 
Reference involved the claims by Andrew Maid, Peter Yama and Toka Enterprises Ltd, 
respectively. These claimants essentially sought compensation for the economic losses 
they allegedly suffered as a result of the State's alleged maladministration of their 
asserted proprietary interests. 

Despite obvious defences available to the State, die Solicitor General, owing to a 
combination of factors, including incompetence and lack of due diligence, simply failed 
to take all steps necessary to protect the interests of the State adequately or at all. The 
common and critical defences recurring in all these claims were lack of mandatory 
notice under Section 5 of the CBAAS Act, no reasonable cause of action disclosed and 
the actions were statutory time-barred. As a direct result of the Solicitor General's gross 
negligence in settling two (2) and failing to defend one (1) of the three (3) claims, the 
State's liability exceeds K47 million. 

In accordance with the Commission's recommendations there are excellent prospects of 
setting aside the judgment debt [Toka Enterprises Ltd - K27 million] and the said deeds 
of settlement [Peter Yama - K15 million and Andrew Maid - K5.2 million paid but 
which is recoverable]. 

As for the Department itself, the Commission recommends a Commission of 
Inquiry be established to inquire into the management generally of the Department 
of Lands & Physical Planning to identify and rectify the systematic failings and 
misconduct in respect of the following: 

I. Acquisition of customary land by the State- 



68 



(a) Lack of proper records as to original acquisition; 

(b) Lack of instructions to the State Solicitor and Solicitor General to 
protect the interests of the State; 

(c) Gross disregard of Schedule 2 of the National 'hand Registration Act on 
assessment of claims; 

Mismanagement of State land - 

(i) Operations of the PNG Land Board; 

(ii) Non-compliance with requirements of Land Act and related 

legislation and lease covenants (UDL and all other leases); 

(iii) Abuse and misapplication of the laws; 

(d) Missing land files; 

(e) Missing documents; 

(f) Ad-hoc creation of supplementary files; 

(g) Unreliable filing system; 
(h) Unreliable Registers; 

(i) Lack of co-ordination within department; 

(j) Fraudulent creation of files and documents; 

(k) Forgery of signatures of officers; 

(1) Failure to notify interested persons; 

(m) Uncertainty with appointments for meetings generally; 

(n) Lack of supervision of all staff; 

(o) Failure to observe business opening hours; 

(p) Inefficient service; 

(q) Unreliable recording of information on files; 

(r) Unreliable custody and movement of files; 

(s) Incompetence; 

(t) Lack of effective communication with Solicitor General, State 

Solicitor and related state agencies in protecting State's interests; 



69 



Further, the Commission's immediate recommendations are that: 

> officers implicated or involved to be suspended pending further 

investigation; and 
y Creation of manual for processes and procedures of the Department. 



70 



(a) Toka Enterprises Ltd 

PARTIES: 

(i) For the State: 

1 . Department of Lands & Physical Planning ('DLPP') 

2. Department of Justice and Attorney General ('DJAG') 

3. Department of Finance ('DoF') 

4. National Broadcasting Corporation ( C NBC) 

(ii) Claimant: 

1 . Toka Enterprises Limited (TEL 5 ) 

B. NATURE OF CLAIM: 



1. TEL alleged that between 1989 and 2007 the Minister and Secretary for Lands 
& Physical Planning breached their statutory duties by not issuing title for a State lease 
granted to TEL. 

2. TEL successfully applied to the Court to compel performance of the statutory 
duties and also obtained damages against the State for the losses it suffered. 

DOES THE MATTER FALL WITHIN THE TERMS OF REFERENCE 

1. In or about June 2009, the Attorney General referred to this Commission the 
Solicitor General file (SG 185/07) on the National Court proceedings 
referenced OS 240 of 2007 involving TEL -v- Dr 



71 



Puka Temu, Minister for Lands & Physical Planning; Pepi Kimas, 
Secretary for Lands & Physical Planning; and The State. 

The court claim was commenced by TEL on 3 May 2007 and various 
orders were made against the State on 7 June 2007 (leave), 27 June 
2008 (mandamus) and 27 November 2008 (damages) against the 
Minister, Secretary for Lands & Physical Planning and State. 

3. The statutory breaches asserted between 1989 and 2007 formed the 
basis of the court action and orders, including the K27,784,S36 award 
of damages, which spanned 14 years from 1995 to 2008, falling within 

I" the period under inquiry 2000 to l 5t July 2006. 

No payment has been made by the Department of Finance ('DoF'). 

5. In the circumstances, this matter falls within Terms of Reference No. 
1, 8, 10, 11, 13 and 14. This was confirmed by the decision of the 
National Court on 14 August 2009 presided over Justice Gavara- 
Nanu in OS (JR) No. 352 of 2009. The Court refused TEL's 
application for leave to apply for judicial review of the Commission's 
decision to inquire into OS No. 240 of 2007. The Commission's costs 
were also awarded against TEL on a solicitor-client basis. Counsel 
Assisting was initially removed as party on 4 August 2009 and 'TEL 
was ordered to meet his party/party costs. 

A ^gESOFINFQRMAT10N A 

!• Tfte brief comprises information obtained from all persons 

considered by the Commission as having an interest in the inquiry 
into this matter, in particular:- 



72 



National Court Registry — original Court file referenced OS 
No. 240 of 2007 
Office of Solicitor General - 
(i) Original file SG 185/07 
(ii) Evidence of - 

o Neville Devete, Solicitor General o Gaure 
Odu, lawyer Department of Lands & Physical 
Planning - 
(i) Land files for ~ 

o Lots 9-11, Section 136, Hohola, NCD o Part Portion 1455 

(later 2126), Granville, Moresby, NCD 
o Portion 109 (later 2251), Granville, Moresby, NCD o Lots 10-16, 
Section 496, Hohola, Gordon, NCD 
(ii) Evidence of — 

o Pepi Kimas, Secretary o John Ofoi, Chief 

Physical Planner o Samuel Kodawara, 

Surveyor General o Raga Kavana, Registrar 

of Titles 

National Broadcasting Corporation - 

(i) Evidence of Joseph Ealadona, Managing Director 

Evangelical Church of Manus - (i) Evidence of - 

o Joseph Pokawin, Chairman o Sku Kuyei, Treasurer 

The Church of Jesus Christ of Latter-Day Saints - (i) Evidence 
of- 



73 



O Paul Maiu, Facilities Manager, Solomon Islands & PNG 



(g) Toka Enterprises Ltd - (i) 
Evidence of- 
o Mahuru Dadi Toka, Sole Director o John S Goava, lawyer, Sannel Lawyers 

2. The relevant transcripts of proceedings, particularly for Tuesday, 22 
September 2009 and Wednesday, 23 September 2009, are provided with 
this Brief. 

3. The critical evidence given by each of these witnesses is discussed where 
relevant in the course of the findings (F) of this Brief. 

CHRONOLOGY OF EVENTS 

Prior to Independence 16 September 1975 

1. The Australian Broadcasting Commission ('ABC') erected transmitter 
aerials and a number of residential and office buildings on part Portion 
1455. 

2. The National Broadcasting Commission ('NBC') acquired ABC's interests 
including part Portion 1455. 



1982 



3. Lots 9, 11 and 12, Section 136 were zoned 'Residential' in the 
Waigani City Centre Master Plan 1982. 



74 



1987 

4. On 2 July 1987, the Evangelical Church of Manus ('ECM') was registered as 
proprietor of Mission Lease, Volume 109, Folio 83, over land described as Lot 
9, Section 136, Hohola, NCD, containing an area of 0.837 hectares. The Lease 
period is 99 years expiring on or about 2 July 2086. 

5. On 29 September 1987, the PNG Town Planning Board at its meeting no. 
20/87 granted approval in principle to TEL's proposed residential TSL subject 
to a number of conditions. TEL was notified by letter dated 2 October 1987 
from the Chairman, PNG Town Planning Board. 

1989 

6. On 10 February 1989, the PNG Land Board (meeting no. 1745, item 18) 
recommended that TEL be granted a Town Sub-division Lease over 
Allotments 9, 11 and 12 (Consolidated), Section 136, and part Portion 1455, 
(Waigani City Centre) Milinch Granville, Fourmil Moresby, National Capital 
District ('TEL 1989 TSL). 

7. On 16 February 1989, TEL was gazetted in National Gazette No. G12 at page 
167 as the successful applicant for the TEL 1989 TSL, an area of 8.81 hectares. 

8. In relation to Section 136, Lot 9 had an area of 0.837 hectares; Lot 11, 0.558 
hectares; and Lot 12, 0.100 hectare. Part Portion 1455 had an area of 7.32 
hectares. 



75 



9. By letter dated 30 June 1989, Secretary, DLPP informed NBC on the 

grant of the TSL to TEL and urged NBC to either (a) remove the 

improvements or (b) negotiate with TEL on the use or disposal of 
the improvements. 

10. On 3 July 1989, TEL formally accepted the TSL under a Letter of Grant 
by execution of the Lease Acceptance Form, and payment of all the 
prescribed fees. 

11. By letter dated 12 October 1989, the State Solicitor advised the Secretary, 
DLPP to resolve the dispute between NBC and TEL in respect of 
Portion 2126 (formerly part Portion 1455) in favour of TEL on the basis 
that NBC did not appeal against the grant of the TSL by the PNG Land 
Board. 



12. By letter dated 10 November 1989 to TEL, DLPP Assistant Secretary 
Southern Region, Silas Peril confirmed three (3) options offered to TEL 
to compensate for wrongly including Lot 9, Section 136, Hohola in the 
TSL. The compensation options were to grant TEL: 

(a) Northern part of Portion 2127; 

(b) Lot 102, Section 51, Granville; or 

(c) Any Business (Light Industrial) block available in NCD. 

On 21 November 1989, TEL applied for a Business (Light Industrial) Lease 
over Portion 109, Granville, Moresby, NCD, as compensation for Lot 9, 

Section 136 of TEL's TSL (Portion 109 A . Mahuru Dadi Toka lodged the 
application for TEL. 1 



76 



1990 

14. On 1 June 1990, NBC Chairman Kedea Uru, Deputy Secretary Lands John Yauwi, 

Minister for Lands Hon. Kala Swokin, Minister for Lands' Secretary Tau Po'o, and 
Dadi Toka, TEL had a meeting concerning Portion 2126, Waigani in which it was 
resolved that:- 

(a) DLPP will compensate TEL by granting a parcel of land equivalent to the 

area occupied by two (2) NBC houses; 

(b) Minister for Lands to support NBC's NEC Submission for 
K12 million to relocate its aerial farm to Lae to allow TEL to 
proceed with development under terms of TSL; 

(c) TEL to proceed with Stage 1 of TSL, and implement Stage 2 
immediately after NBC aerial farm is relocated; and 

(d) DLPP immediately implement decision (a) and consult TEL. 

15. By letter dated 6 September 1990 to the Southern Region Manager, DLPP, 

the Minister for LPP, Hon. Kala Swokin, directed that Portion 109, 
Hohola be granted to TEL, as identified by TEL, as adequate 
compensatory land for Lot 9, Section 136. 

16. On 6 September 1990, TEL applied again for a Business (Light Industrial) Lease over 
Portion 109, Granville, Moresby, NCD, as compensation for Lot 9, Section 136 of 
TEL's TSL, containing an area of 2.8746 hectares ('Portion 1090- 

17. By Notice of Land Board Meeting dated 19 September 1990, TEL was advised that 
the PNG Land Board was scheduled to hear TEL's application for Portion 109. 



77 



18. On 27 September 1990, PNG Land Board (Land Board Meeting No. 1832, Item 
37) recommended to grant TEL's application for Portion 109 in replacement of 
Lot 9, Section 136, Hohola wrongly allocated to TEL as part of the TEL 1989 
TSL. 

19. On 13 November 1990, the Chairman, PNG Land Board notified TEL of its 
successful application for Portion 109. 

1991 

20. On 14 March 1991, TEL was gazetted in National Gazette No. G27 at page 48 as 
the successful applicant for Portion 109. 

21. On 5 May 1991, a Letter of Grant and Lease Acceptance Form in respect of 
Portion 109 were issued to TEL. 

22. On 26 September 1991 a corrigendum was published in the National Gazette G85 
advising that Portion 109, Milinch, Granville, Fourmil Moresby was listed in error 
as it should have read as 109 Rem which should now be described as portion 2251, 
Milinch Granville, Fourmil Moresby, NCD. 

23. On 27 September 1991, TEL was registered as proprietor of Business Lease 
Volume 1 Folio 185 over Portion 2251, Granville, Moresby, NCD, containing an 
area of 2.8746 hectares. The Lease period was 99 years commencing on 14 March 
1991 and expiring on 13 March 2090. 

1992 



24. On 28 October 1992, TEL applied to the Minister for Lands & Physical 

Planning seeking consent to conditionally surrender Portion 2251 for 
issuance of seven (7) individual leases ('Conditional Surrender') 



78 



25. On 9 November 1992, the Minister for Lands & Physical Planning's Delegate, Paul 
Bengo, accepted TEL's Conditional Surrender. 

1993 

26. On 8 February 1993, TEL lodged an application with the NCD Physical Planning 
Board for planning permission (PPP04 649/93) to subdivide Portion 2251 ('Portion 
2251 Subdivision PW). 

27. On 2 March 1993, the NCD Physical Planning Board (Meeting No. 2/93) approved 
TEL's Portion 2251 Subdivision Plan. 

28. By Notice dated 26 May 1993, the Minister for Lands & Physical Planning approved 
TEL's application to conditionally surrender Portion 2251 for sub-division into 
seven (7) allotments and issuance of separate leases on registered survey plan 
49/2082. 

29. TEL was registered as proprietor of seven (7) separate Business Leases Volume 7 
Folio 232-238 (inclusive) over Section 496 Lots 10-16 (inclusive) respectively. The 
Leases were each for a period of 98 years 206 days commencing on 28 April 1993. 

1994 

30. By letter dated 27 January 1994 to Secretary, DLPP, Beresford Love, lawyers for 
TEL followed up on the meeting concerning the non-issuance of title over the TEL 
1989 TSL, noting the impending expiration of the TEL 1989 TSL on 16 February 
1994. 



31. On 16 February 1994, TEL's 1989 TSL expired by operation of law: 

Sections 38 and 66C of the then lumdAct (Ch 185). 



79 



32. By Notice published in the National Gazette No. G28 dated 21 April 2004 the 
DLPP advertised Tenders No. 56/94 and 57/94 comprising Business 
(Commercial) Leases over Lots 11 and 12 respectively, Section 136, Hohola, NCD. 

33. On 28 July 1994, PNG Land Board No. 1927 (Item 102) recommended that 
Tatabai No. 24 Pty Ltd be granted a Business (Commercial) Lease over Lot 11, 
Section 136, Hohola. 

34. By letter dated 2 August 1994 to die Secretary, DLPP, Beresford Love, lawyers for 
TEL informed the Secretary, DLPP that TEL proposed to surrender the TSL in 
consideration for the grant of a lease over Portion 1437. 

1995 

35. By letter dated 13 February 1995, Henaos, lawyers for TEL requested a meeting 
with the Secretary, DLPP to resolve issues relating to the non- issuance of title 
over the TEL 1989 TSL. 

1996 

36. By Notice published in the National Gazette No. G9 dated 26 January 1996 at 
page 55 Tatabai No. 24 Pty Ltd was advertised as the successful applicant for a 
Business (Commercial) Lease over Lot 11, Section 136, Hohola. 

37. On 23 February 1996, Tatabai No. 24 Pty Ltd was registered as proprietor of 
Business (Commercial) Lease, Volume 17, Folio 85, over land described as Lot 11, 
Section 136, Hohola, NCD. The Lease period is 99 years commencing on 26 
January 1995 and expiring on or about 25 January 2094. 



80 



2002 

38. By letter dated 6 December 2002, Warner Shand, lawyers for TEL requested the 
Minister for Lands & Physical Planning to investigate and advise on its position on 
the issues relating to the non-issuance of the tide over the TEL 1989 TSL. 

2003 

39. After a review of the Waigani City Centre Plan on 27 February 2003, Portion 2126 
(formerly 1455) was sub-divided and described as Portions 2538 and 2539. 

40. The Waigani City Centre zoning plan was approved by the NCD Physical Planning 
Board and was subsequently published in the National Gazette No. G681 dated 26 
June 2003. Portion 2126 ceased to exist as of this event. 

41. On 26 August 2003, the approval of the Waigani City Centre zoning plan was 
advertised in the Post Courier as Public Notice. 

42. On 19 September 2003, T. M. Rei Lawyers objected on behalf of TEL against the 
Waigani City Centre zoning plan to the NCD Physical Planning Board. 

43. On 13 November 2003, T. M. Rei Lawyers appealed on behalf of TEL to the PNG 
Physical Planning Appeals Tribunal. The Tribunal then made recommendation to 
the Minister for rejection of the appeal. 

44. On 23 December 2003, the Minister for Lands & Physical Planning accepted the 
recommendation of the PNG Physical Planning Appeals Tribunal and rejected the 
appeal. 



2004 



81 



45. On 9 February 2004, Tatabai No. 24 Ltd transferred Business (Commercial) Lease, 
Volume 17, Folio 85, over land described as Lot 11, Section 136, Hohola, NCD, to 
The Church of Jesus Christ of Latter-Day Saints under a contract of sale. 

2005 

46. By letter dated 26 July 2005, M. S. Wagambie, lawyers for TEL again followed up 
with the Minister for Lands & Physical Planning to investigate and advise on its 
position on the issues relating to the non-issuance of the tide over TEL 1989 TSL. 

2007 

47. By letter dated 27 January 2007, Sannel Consulting Services Inc, requested a 
meeting with the Minister of Lands & Physical Planning on the issues relating to 
the non-issuance of the title over TEL 1989 TSL, failing which legal proceedings 
would be instituted. 

48. On 27 February 2007, by letter dated 26 February 2007, Sannel Consulting Services 
Inc. gave notice to the Solicitor General of TEL's intention to make a claim against 
the State for non-issuance of title in respect of the TEL 1989 TSL and also for 
damages. 

49. On 3 May 2007 (18 years after grant), TEL brought proceedings under OS 240 of 
2007 by way of judicial review against the Minister for Lands, the Secretary for 
Lands and the State out of its successful application on 10 February 1989 to be 
granted the TEL 1989 TSL. 

50. On 15 May 2007, the National Court presided over by Justice Salika (as he then 
was) adjourned the proceedings to 22 May 2007. John Goava appeared for TEL 
and Gaure Odu appeared for the Minister for Lands, the Secretary for Lands and 
the State ('State parties'). 



82 



51. On 22 May 2007, the National Court presided over by Justice Salika (as he then 
was) further adjourned the proceedings to 7 June 2007 with costs to TEL. John 
Goava appeared for TEL. Gaure Odu appeared for State parties and applied for the 
adjournment. 

52. On 5 June 2007, Mr Neville Devete, Acting Solicitor General filed a Notice of 
Appearance in OS No. 240 of 2007 for all the defendants i.e., Pepi Kimas, Secretary, 
DLPP, Dr Puka Temu, Minister for LPP and the State. 

53. On 7 June 2007, leave to apply for judicial review was granted by the National Court 
in OS No. 240 of 2007. Mr Tauvasa Tanuvasa of the Solicitor General's Office 
appeared for the State and unsuccessfully applied for an adjournment of the hearing 
due to the unavailability of Mr Gaure Odu, lawyer in carriage of the matter. Mr John 
Goava appeared for TEL. Mr Goava submitted to the Court that there were no 
competing grounds or interests in respect of the land subject of the TSL. 

54. 17 July 2007 was the 40 th day on which the State was required to file an appeal 
against the decision of 7 June 2007: Section 17 of Supreme Court Act. 

55. By letter dated 10 August 2007, the Solicitor General provided the Secretary, DLPP 
with copies of the court documents in OS No. 240 of 2007, and sought instructions. 

56. By letter dated 16 August 2007, the Secretary, DLPP instructed the Solicitor General 
to seek adjournment of OS No. 240 of 2007 as relevant files had yet to be located 
and reviewed to provide full and proper instructions. 

2008 

57. Ten (10) months later, on 27 June 2008, the National Court granted TEL an order 

in the nature of mandamus requiring the defendants to issue TEL 

83 



with title to the TEL 1989 TSL. TEL was also directed to file evidence of damages 
suffered with submissions within 7 days. Costs were awarded to TEL. Mr Gaure 
Odu of the Solicitor General's Office appeared for the State. No evidence or 
submissions were provided to the Court by the State for its consideration and 
determination prior to the issuance of those orders. 

58. 6 August 2008 was the 40 th day on which the State was required to file an appeal 
against the decision of 27 June 2007: Section 17 of Supreme Court Act. 

59. On 7 July 2008, Sannel Consulting Services Inc served on the office of Solicitor 
General, a copy of sealed Court Order dated 27 June 2008 under cover of letter 
dated 30 June 2008 addressed to the Solicitor General and circulated to the 
Minister and Secretary, DLPP ('SCS' letter'). 

60. On 14 July 2008, Secretary, DLPP made a notation on SCS' letter seeking Manager 
Manager, Legal Services, Ian Kundin's advice and expressing his understanding 
that the Court Order would be challenged. 

61. On 14 October 2008, Neville Devete, Acting Solicitor General caused a letter 
dated 1 September 2008 to be faxed to DLPP's Manager, Legal Services, Ian 
Kundin in which the Court Order of 27 June 2008 was enclosed with advice to 
issue title over Portion 2126, Granville and Lots 9, 11, 12 (Consolidated), Section 
136, Hohola, NCD as soon as possible to avoid possible contempt. 

62. In a separate hearing on 27 November 2008, the National Court awarded TEL 
damages in the sum of K27, 784,536. 00, consisting substantially of past and future 
economic losses spanning 14 years from 1995 to 2008. Mr Goava appeared for 
TEL. No appearance was made on behalf of the State. 



84 



1990 

63. 6 January 2009 was the 40 th day on which the State was required to file an appeal 
against the decision of 27 November 2008: Section 17 of Supreme Court Act. 

64. On 16 March 2009 (20 years after grant), TEL was registered as proprietor of Urban 
Development Lease, Volume 34, Folio 49, over land described as Portion 2538, 
2539 (19), Milinch Granville, (Section 136 Hohola)(Cons), Moresby, NCD, 
containing an area of 3.950 hectares ('TEL UDL March 2009'). 

65. By letter dated 26 May 2009, Sannel Lawyers proposed to the Legal Officer, DLPP 
that TEL be compensated with parcels of land under a new title in consideration of 
the following: 

(a) TEL surrender TEL UDL March 2009 on 26 May 2009. 

(b) The new tide be prepared for TEL as "one tide" replacing the TEL 
UDL March 2009. 

(c) TEL be allocated with new land covering area of 0.8670 hectares as 
compensation for loss of Lot 9, Section 136 

(d) TEL be allocated with new land covering area of 2.833 hectares as 
compensation for loss of road severance or slightly greater size based on 
economic value of road land. 

(e) TEL has identified Lot 3, Section 439, Waigani City Centre as an 
appropriate compensatory package. 

(f) TEL considered Portion 2537, Waigani City Centre as compensatory 
land. 

66. On 4 June 2009, TEL applied for the surrender of the TEL UDL March 

2009. 



85 



67. On 10 June 2009, the Registrar of Titles cancelled the TEL UDL March 2009. 

68. On 16 June 2009, TEL was registered as proprietor of Urban Development 
Lease, Volume 34, Folio 173, over lands described as Portion 2534, 2535, 
2538,2539 & (DC/136/019)(CONS), Granville, Moresby, NCD, containing 
an area of 6.227 hectares (TEL UDL June 20090- 

69. The TEL UDL June 2009 is for a term of five (5) years commencing 11 
June 2009, but erroneously records the expiration date as 10 June 2104 (a 
term of 95 years). 

70. No appeal was filed against any of the National Court decisions within the 
statutory time limit. However, on 1 1 September 2009 the Solicitor General 
endorsed the Certificate of Judgment stating that "the State proposes to take 

further action in this matter and satifaction of judgement cannot take place". 

Land area granted to TEL 

71. The TEL 1989 TSL originally granted to TEL contained an area of 8.81 
hectares. 

72. The compensatory land of Portion 109 granted to TEL as replacement for 
Lot 9, Section 136, contained an area of 2.8746 hectares. Lot 9 contained an 
area of 0.8670 hectares. 

73. TEL's TEL UDL June 2009 contains an area of 6.227 hectares. 

74. In sum, TEL has received a total land area of 9.10 hectares, an excess of 
0.29 hectares from the TEL 1989 TSL. 



86 



F. FINDINGS 

I. Liability In Issue 

(i) Non-compliance with Sections 5 and 21 - Claims By and Against the 
State Act 1996 

1. On 27 February 2007, Sannel Consulting Service Inc served on the Office of the 
Solicitor General a letter dated 26 February 2007 addressed to the Office of the 
Solicitor General, giving notice of TEL's intention to make a claim against the State 
("Notice of claim"). 

2. On 16 February 1994, TEL's 1989 TSL expired by operation of law. That is, after five 
years from 16 February 1989, being the date on which notice of such grant was 
published in the National Gazette: Sections 38 and 66C of the then luindAct (Ch 185). 

3. To the extent TEL sought damages, TEL's cause of action accrued during the 
currency of the TEL 1989 TSL between 16 February 1989 and 16 February 1994, 
being the last date on which TEL was entitled to be issued with title to the TEL 1 989 
TSL. This was prior to the commencement of the Claims By and Against the State Act 
1996 ('Claims Act') on 27 February 1997. 

4. As TEL's cause of action accrued prior to the commencement of the Claims Act, TEL 
was required to give notice of its intention to make a claim against the State within six 
(6) months thereafter i.e., by 20 August 1997: Section 21(2) of the Claims Act. 

5. TEL did not give notice of its intention to make a claim against the State until 27 
February 2007. This was over 9 years and 5 months after the mandatory time period. 



87 



6. Further, the Notice of claim was given without an extension of time to do 
so by either the Principal Legal Adviser or the National Court: Section 
21 (2) (a) and (b) of the Claims By and Against the State Act 1996. 

1 . A number of discrepancies are also evident: 

(a) The Notice of claim is not a request for extension of time to 
give notice. Clearly it is actual notice of intention to enforce a claim. 

Without extension of time being granted by the Principal Legal 
Officer or the National Court, TEL was not at liberty to lodge 
his Section 5 notice. 

(b) Any suggestion by TEL that the Notice of claim can be 
deemed to be a request for extension of time, is again flawed as 
it is addressed to the Office of the Solicitor-General when it 
should have been addressed to the Principal Legal Officer 
which is the Attorney-General: Section 3 of the Attorney-General 
Act 1989. 

(c) TEL's position is further compounded by no letter "accepting" the Notice 

of claim as notice under Section 5 of the Claims By and Against the State 
Act 1996. 

pb It is found that TEL's Notice of claim breached the mandatory 
requirements of Sections 5 and 21(2) of the Claims Act and 
was, therefore, invalid. 

p3 It is found that John Goava, Neville Devete and 
Gaure Odu were negligent in not identifying these 
anomalies. 



88 



pb It is recommended John Goava, Neville Devete and Gaure Odu 
should be referred to the Lawyers Statutory Committee for 
unprofessional conduct and incompetence ft) It is further 
recommended that Neville Devete and Gaure Odu should be 
referred to the Departmental Head of Department of Justice & 
Attorney General on a charge of being negligent or careless in 
the discharge of their duties 

(ii) No merits in claim 

There were significant issues of fact and law not disclosed to the National Court that 
substantially affected the assertions and relief sought in the Statement filed in 
support of the Originating Summons No. 240 of 2007. 

(a) Invalid grant of TEL 1989 TSL 

The grant of the TEL 1989 TSL was invalid ab initio (from the beginning) on six (6) 
grounds. 

Firsdy, part Portion 1455 (later Portion 2126) was not vacant land. NBC had existing 
improvements on that parcel of land subject of the TEL 1989 TSL and was, 
therefore, not suitable or available for a TSL: Section 66(1) of the Land Act (Chapter 
185). 

Secondly, the TEL 1989 TSL was not offered for lease by public tender. This was in 
breach of the mandatory requirements of Sections 31(2) and 66 of the Land Act 
(Chapter 185). At the material time, a TSL could only be exempted from 
advertisement for tender in the event of a disaster occurring as defined in the Disaster 
Management Act (Chapter 402) necessarily 



89 



requiring the relocating of persons displaced as a result of such disaster 
onto the TSL. There was no evidence that such disaster had occurred 
justifying exemption from advertisement for tender of the TEL 1989 TSL. 

12. Thirdly, despite NBC's interest in part Portion 1455, the PNG Land Board 
did not notify NBC by post of the date on which TEL's application for a 
TSL would be considered in breach of this mandatory requirement under 
Section 9(2) of the Land Act (C185). 

13. Fourthly, despite NBC's interest in part Portion 1455, the PNG Land 
Board did not forward to NBC notice of the PNG Land Board's 
recommendations. This was in breach of the mandatory requirement under 
Section 9(9) of Land Ad (C185). 

14. Fifthly, despite ECM's registered title over Lot 9, Section 136, the PNG 
Land Board did not notify ECM by post of the date on which TEL's 
application for a TSL would be considered. This was in breach of Section 
9(2) of the Land Act (C185). 

15. Sixthly, despite ECM's registered title over Lot 9, Section 136, the PNG 
Land Board did not forward to ECM notice of the PNG Land Board's 
recommendations. This was in breach of the mandatory requirement under 
Section 9(9) of Land Act (C185). 

16. Mahuru Dadi Toka, and Pepi Kimas agreed in evidence that Lot 9, Section 
136 was granted in error by DLPP. 

R3 It is found that TEL's 1989 TSL was granted in error and 
invalid from the beginning 



90 



It is recommended the State challenge the National Court Orders 
made on 27 June 2008 (mandamus) and 27 November2008 
(damages) 

\b It is found that John Goava, Neville Devete and Gaure Odu 
were negligent in not identifying these anomalies. 

p3 It is recommended that John Goava, Neville Devete and 
Gaure Odu should be referred to the Lawyers Statutory 
Committee for unprofessional conduct and incompetence 

(b) Expired TEL 1989 TSL 

17. TEL's 1989 TSL had expired on 16 February 1994 by operation of law- 
after five years from 16 February 1989, being the date on which notice of 
such grant was published in the National Gazette: Sections 38 and 66C of 
the Land Act (Ch 185). 

18. As TEL's 1989 TSL had extinguished on 16 February 1994, there was no 
such right or interest existing as at 17 February 1994 capable of registration 
or enforcement, including orders for mandamus. 

1 9. Therefore, when TEL filed OS No. 240 of 2007 on 3 May 2007 there was 
no reasonable cause of action available. 

R} It is recommended the State challenge the National Court 
Orders made on 27 June 2008 (mandamus) and 27 
November2008 (damages) 



91 



fb It is found that John Goava, Neville Devete and Gaure Odu were 
negligent in not identifying these anomalies and failed in their duty 
to assist the Court. 

\b It is recommended that John Goava, Neville Devete and Gaure Odu 
should be referred to the Lawyers Statutory Committee for 
unprofessional conduct and incompetence 

(c) Portion 21 26 Non-existent 20. Portion 2126 (formerly part Portion 
1455) ceased to exist upon subdivision into Portions 2538 and 2539 pursuant to a 
review of the Waigani City Centre Plan on or about 27 February 2003. The change 
in the legal description, and physical metes and bounds of the subject parcel of 
land extinguished any unregistered proprietary interest that TEL may have had in 
Portion 2126. 



21. There was no land described as Portion 2126 as at 27 February 2003, so there was 
no such right or interest capable of registration or enforcement, including orders 
for mandamus. 

22. Therefore, when TEL filed OS No. 240 of 2007 on 3 May 2007 there was no 
reasonable cause of action available. However, the Department of Lands & 
Physical Planning files and records were not readily available for providing full and 
proper instructions to the Solicitor General. 

R} It is recommended the State challenge the National Court 
Orders made on 27 June 2008 (mandamus) and 27 
November2008 (damages) 



92 



pD It is recommended that an inquiry be conducted into Department of 
Lands <& Physical Planning 

(d) A.ction time barred 

23. Section 16 of the Frauds & Limitations Act 1988 required TEL to 

commence its action within six (6) years from the date on which each cause 
of action arose. 

24. From perusal of the statement of facts pleaded by TEL to give rise to the cause of 
action, TEL asserted that after being granted the TEL 1989 TSL, its attempts to 
obtain title between 1989 and 2007 was unsuccessful. 

25. The time for TEL to commence legal action for damages accrued during the 
currency of the TEL 1989 TSL between 16 February 1989 and 16 February 1994. 
Thus, the last date on which TEL's cause of action for damages accrued was on 16 
February 1994. Six (6) years from that time falls on 16 February 2000. Therefore, 
TEL was required to commence legal proceedings for a claim in damages no later 
than 16 February 2000. 

26. On 3 May 2007, TEL filed OS No. 240 of 2007 in the National Court. That is, over 
7 years and 2 months after the time had expired for TEL to bring such an action. 

27. Therefore, the court action by TEL was clearly time barred and liable to be 
dismissed on that basis. 



R} It is recommended the State challenge the National Court 
Orders made on 27 June 2008 (mandamus) and 27 
November2008 (damages) 



93 



It is found that John Goava, Neville Devete and Gaure Odu were 
negligent in not identifying these anomalies and failed in their duty 
to assist the Court. 

Fb It is recommended that John Goava, Neville Devete and Gaure Odu 
should be referred to the Lawyers Statutory Committee for 
unprofessional conduct and incompetence 

(e) Non-service on in teres ted parties 

28. The judgment on 27 June 2008 in OS No. 240 of 2007 was given without affording 
the opportunity to four (4) persons with proprietary interests in parcels of land 
within the TEL 1989 TSL to be heard. Those persons were the: 

(a) National Broadcasting Corporation (Portion 2126); 

(b) The Evangelical Lutheran Church of Manus (Lot 9, Section 

136); 

(c) The Church of Jesus Christ of Latter Day Saints (Lot 11, Section 136); 

(d) The Department of Foreign Affairs (Lot 12, Section 136). 

29. Despite their clear legal interests, the interested persons were not served with the 
Notice of Motion for judicial review. This was in breach of Order 16 Rule 5(2) of 
the National Court Rules. 



30. Further, TEL did not file an affidavit setting out why the interested 

persons were not served with the Notice of Motion for judicial review. 
This was in breach of Order 16 Rule 5(5) of the National Court Rules. 



94 



Fb It is recommended the State challenge the National Court 
Orders made on 27June 2008 (mandamus) and 27November 
2008 (damages) 

Fb It is found that John Goava, Neville Devete and Gaure Odu 
were negligent in not identifying these anomalies and failed 
in their duty to assist the Court. 

fb It is recommended that John Goava, Neville Devete and 
Gaure Odu should be referred to the Lawyers Statutory 
Committee for unprofessional conduct and incompetence 

Rj It is further recommended that Neville Devete and Gaure 
Odu should be referred to the Departmental Head of 
Department of Justice <& Attorney General on a charge of 
being negligent or careless in the discharge of their duties 

(f) Non-disclosure 

31. In OS No. 240 of 2007, TEL sought and obtained orders relating to a 
Town Sub-division Lease over Allotments 9, 11 and 12 (Consolidated), 
Section 136, and part Portion 1455, (Waigani City Centre) Milinch 
Granville, Fourmil Moresby, National Capital District (TEL 1989 TSL 5 ). 
There were a number of relevant and material facts not disclosed to the 
Court by Mahuru Dadi Toka and John Goava in pursuit of TEL's claim in 
OS No. 240 of 2007. 

i. Mahuru Dadi Toka - compensation for Lot 9 

32. TEL's Director, Mahuru Dadi Toka, was dishonest in TEL's pursuit of OS 
No. 240 of 2007 in that he did not disclose at all to his lawyer, Mr John 



95 



Goava of Sannel Consulting Inc., that TEL was given Portion 109 (later 2251) [area 
of 2.8746 hectares] as compensation for Lot 9, Section 136 [area of 0.837 hectares]. 

Relevant excerpts of the transcript of 23 September 2009 containing Mahuru Dadi 
Toka's answers are reproduced hereunder: 

[At page 4421] 

"MR KASSMAN: After it was found that there was an error, were you compensated for 
that error in givingyou lot 9 when all along it was owned by Evangelical Church ? A: Yes, I 
was compensatedportion 2251. It is 109." 

[At page 4426] 

'jQ: Do you have a copy of the originating summons'? basically I will just read, in your 
proceedings you filed in the National Court, you sought an order directing the 
Secretary for hands and the Minister for hands to issue title to you meaning to Toka 
Enterprise Umited over land described as portion 2126 and lots 9,11 and 12 of 
section 136 Hohola. That was one of the order you sought? A: Yes. 

j2-" Andyetyou had already been compensatedfor lot 9. " [At page 4427-4429]: 

MR KASSMAN: You applied for it, you were given orders by the National Court in 

2008. In the course of the hearing was it disclosed to the Court that lot 9 was in fact owned by 

the Evangelical Church ofManus? Was that ever disclosed to the Court? 
A: I never attend to those until the last one, perhaps if my lawyer would — 



96 



Q} Were you ever advised by your lawyer that you could not seek such an order? 

A: F 'lease; I will refer to my lawyer. 

Q: You were not advised as such? Did your lawyer advise you that you could not seek title to 

lot 9? 
A: No. 
Q: Butyou were aware that your proceedings, the proceedings by Toka Enterprises sought title 

to lot 9 and also sought compensation for the fact that you had not been issued title to 

not only lot 9 but all other parcels? 
A: Yes. 

jQ: You are sayingyou were aware of your claim. 
A: I am aware of my claim. 
Q: So you would admit that that was an error on your part or error on the part of your lawyer 

in claiming title over lot 9, would you admit to that? 
A: What I did was, even though as you said, you look at from your angle that I was 

compensated but I wasjust as a package; part and parcel of the land I was granted 

and gazetted and the whole thing goes into the Court. And it would have been — 

there is always ways. 
Q: Butyou never disclosed to the Court that you had been compensated for part of the error, lot 

9. You were given portion 109 which is now portion 2251. 
A: Are you talking from the damages angle or title? 
Q: In Court, when you went into Court that was not disclosed, the fact that you were 

compensated already by the Department of Lands for that area. In fact, I think you 

were given a block of land that is much larger than what you actually lost in lot 9. 
A: So what would you say if I am given a larger block than block 9? 
Q: You have done well. 
A: Good luck to me, thankyou. 
Q: But that was not disclosed. " 



97 



TEL continued to assert to the DLPP its entitlement to compensation for the loss 
of Lot 9, Section 136. John Goava of Sannel Lawyers was not aware of this baseless 
assertion until the Commission informed him that TEL had already received 
compensation for Lot 9, Section 136. 

Mahuru Dadi Toka eventually acknowledged this was wrong when pressed by 
Counsel Assisting, as shown in relevant excerpts of the transcript of 23 September 
2009 containing his answers, which are reproduced hereunder: 

[At page 4433] 

"Qj You mentioned you are no longer pursuing lot 9 or compensation for lot 9. 1 will just show 
jou a copy of a letter that was sent to the Department of hands by your lawyer. It is a 
letter dated 26 May 2009from Sannel Consulting Services addressed to the 
Department of hands and Physical Planning, addressed to Ms Sheila Sukwianomb, 
legal officer. Department of Lands and Physical Planning. Mr Toka, in this - the 
letter is dated 26 May 2009, you are still claiming compensation for the loss of lot 9, 
section 136. As you can see, paragraph No 3, you are still claiming compensation for 
the loss of lot 9. 

A: I did ask my lawyer to write this because Lands Department failed to issue titles and I had 
to hit them to comply with the Court decision. But when it would come to Court 
decision, I think it was a letter written from Kimas, Secretary that — 

Qj Mr Toka,you have been compensatedfor the loss of lot 9. You have been given portion 109 
which is now portion 2251, the Gordon industrial area block which you scry you 
developed and you sold. So you have been compensated for that and you are still 
pursuing compensation. That is wrong. You do not see that as being wrong? 



98 



A: I am just playing the kind of a game from Lands Department to come 
forward with my title because — 

Q: Sojou admit that that is wrong. 

A: I admit that is wrong. 

j2' YOU should not do it. Chief if I could for the record have that marked as 
Toka — 

THE CHAIRMAN: 4. 
MR KASSMAN: Toka 4, thank you. 

[EXHIBIT TENDERED - TOKA 4 - LETTER FROM SANNEL 
CONSULTING SER VICES DA TED 26MA Y2009] " 

ii. Mahuru Dadi Toka - competing interests in Lot 9\ 11 and 
Portion 2126 

Mahuru Dadi Toka also gave evidence that despite having knowledge of 
the competing interests in Lots 9 & 11 of Section 136 and Portion 2126 he 
deliberately made no such disclosure. No reasonable explanation was given 
for taking this position. This is shown in relevant excerpts of the transcript 
of 23 September 2009 containing his answers to questions raised by the 
Chief Commissioner and Counsel Assisting, which are reproduced 
hereunder: 

[At page 4430 - 4432] 

"Q: Do I understand what you are saying there is that, T was allocated 9, 1 1, 
12, part 4145 so one side got it, nobody had any right, the Land 
Department had no right to allocate it, let it out or sell it to anybody else. " 
That is the basis of you making the claim? 

A: Yes. 



99 



Q: I understand that. Whether in fact it is a validposition to have is another matter. But 1 
understand what you are saying. So you were aware then that lot 1 1 was also, haa 
changed hands or was in the title to someone else at the timeyoufiled the proceeding? 

A: I am aware of that. 



Q: Yes, ah 

MR KASSMAN: Was that disclosed to the Court? 

A: Sony? 

Q: Was that disclosed to the Court? Didyou advise or your lawyer advise the Court at the — 

A: No. 

Q: At the time you commenced the action or prior to you obtainingfudgment? 

A: No, I did not disclose my knowledge of lot 11 had a title because I know there is a legai 
battle on my part on lot 11. 

Q: So before orders were issued by the Court directing Lands to issue your title that you 
askedfor and before you obtained yourjudgmentfor damages of 28 million, didyou 
disclose to the Court or did your lawyer disclose to the Court that lot 1 1 was owned by 
the Church of Latter Day Saints? Didyou disclose that? 

A: No. 

Q: And neither did your lawyer? 

A: No. 

Q: But you were aware ofityou were aware of it? 

A: I was aware of it. I had no intention of telling my lawyer. 

Q: Why was that? 

A: But I know there was a great error from Lands Department and I know. 

Q: But you are asking fo fairness on the part of the State but you yourself are not exercising 
that fairness by truthfully disclosing information that is relevant for the Court's 
consideration. You still felt that you were not obliged to disclose that information? 



100 



A: No. 

Q: So that is both in relation to lot 9 which is owned by Church ofManus and lot 1 1 owned 

by the Church of Tatter Day Saints, and also the NBC? A: Sony? 'Q: The NBC? A: 

NBCyes. 

Q: The aerial towers on 2126, that was not disclosed to the Court? A: No, that was not 

disclosed. " 

Hi. John Goava - misled bj Mahuru Dadi Toka and misled Court 

As a result of the foregoing John Goava of Sannel Consulting Services Inc did not 
assist the Court on the following: 

(a) There was no cause of action as TEL's 1989 TSL had expired on 16 

February 1994 by operation of law after five years from 16 
February 1989. 

(b) TEL had not made any application afresh for a TSL. 

(c) The time for commencement of legal action by TEL for damages 

expired on or about 16 February 2000. OS No. 240 of 2007 was filed 
by TEL on 3 May 2007. That is, over 7 years and 2 months out of 
time. 

(d) TEL was given Portion 109 (later 2251 - 2.8746) as compensation for 

Lot 9, Section 136 (0.8670 hectares). 



101 



(e) The interests that National Broadcasting Corporation (Portion 2126); 
The Evangelical Lutheran Church of Manus (Lot 9 Section 136); The 
Church of Jesus Christ of Latter Day Saints (Lot 11, Section 136); and 
Department of Foreign Affairs (Lot 12,136) had in parcels of land 
within the TEL 1989 TSL. 

(f) As at 27 February 2003, Portion 2126 (formerly part Portion 1455) no 
longer existed as it was sub-divided and described as Portions 2538 
and 2539. 

(g) TEL has received a total land area of 9.10 hectares from the DLPP 
and State, being in excess of 0.29 hectares from the original area 
granted under the TEL 1989 TSL (8.81 hectares), 

Consequently, John Goava of Sannel Consulting Services Inc. misled the National 
Court in granting Orders on 7 June 2007 (Leave), 27 June 2008 (mandamus) and 27 
November 2008 (damages). This concession was made by John Goava as shown in 
relevant excerpts of the transcript of 23 September 2009 containing his answers, 
which are reproduced hereunder: 

[At page 4463 - 4466] 

'MR KASSMAN: Yes, we do have the transcript. Mr Goava, I will just maybe just read 
from the transcript on the application for leave, which was conducted on 7 June 2007. At 
page 4 of the transcript, His Honour Justice Lay asked, 'Has there been any to jour client's 

knowledge, have there been any competing grounds made in respect of this land?" In response, 
you said, 'Your Honour, according to our client he has made - there are no competing issues. " 

Now, I interpret to be saying the Court askingyou, is there any other competing interest, is 

there any other party with an interest in the land, the subject of your action, and you advise the 

Court that there were no competing interests. 



102 



A: Counsel, the reason why I said that was because we were not too sure about the boundary. 
THE CHAIRMAN: No, butjust those words. That is what you said? 

A: Yes. 

Q: Butjou said that you knew about the Tatter Day Saints, that they held the title'? 

A: That is — 

Q,: You knew the NBC had an interest? 

A: Commissioner, to answer your question there was — when you raised the issue of title there 

was no title issued to NBC at that time. 
j2- No, not to NBC but the title was already issued to the hatter Day Saints, was it not? 
A: As I said earlier I was not aware of that title over Tot 9 and Tot 1 1. 
f): You had no knowledge of Tatter Day Saints? 
A: No. So I could not assist the Court in that aspect as far as my — 
MR KASSMAN: Do you concede that you misled the Court? 
A: I mean at that time I did not have that information so — 
Q: So you misled the Court? 
A: But I should not say it because it is something that I did not know, how would I say the 

ot 

f): Well? 

A: It would be contradictory. 
Qj I am suggesting that you should have said, "I cannot conclusively say your Honour, I might 

need to conduct a title search. " That would have been in my respectful view, that 

would have been the appropriate course rather than sayingf* 'Your Honour, they are 

no competing interests. " 

A: Because at that point in time, my instructions as well as I was aware that there was no 
competing interests. 



103 



THE CHAIBMAN: But then was. There was no resolution regarding the NBC. You 
knew that the -you did not know about the boundaries. There was an enormous amount of 
information that you did have to answer that question of the Judge. 
A: Chief Commissioner, in respect of Allotment 9 and 11,1 never had that 

information regarding the new proprietorships. MR KASSMAN: That is the point 1 
am saying. You have said that you had not obtained results of a title search in respect of hots 9 
and 11. Whereas if you had, and if that had disclosed that there was no title or it was not 
owned by anyone else, then you would have been correct. In this instance you had not done a title 
search and as such you could not assist the Court one way or another. Your disclosure was 
misleading that is what I am putting to you. You misled the Court to believe that there was no 
other interest other than your client's interest in hot 9, hot 1 1, hot 12 and Portion 2126. You 
have misled the Court into believing that it was only your client that had an interest in those 
lands and as such the Court thought, obviously considered that it was not necessary to hear from 
anyone else, that it was safe to rely on your word and as such the Court proceeded to grant leave 
for judicial review to your client. 
A: I think to use the word 'misleading, I think it is not appropriate because 

I had no intentions of misleading the Court at that time. Q: So it would be proper 
nowforyou to say, I was wrong? A: Given the evidence that is now before this Commission, I 
would say I am wrong. 

Q: So I am correct in saying that, at that time you misled the Court? A: If you may, 
I mil concede to that. 

THE CHAIRMAN: What would your duty be as a lawyer now? A: I would try 
and correct that anomaly; discrepancy. " 



104 



Fb It is recommended the State challenge the National Court 

Orders made on 7 June 2007 (leave), 27 June 
2008 (mandamus) and 27November2008 (damages) 

Fb it is found that John Goava misled the National Court by not 
disclosing that his knowledge of the proprietary status of the 
parcels of land in question was not conclusive. 

Fb It is recommended that John Goava should be referred to the 
Lawyers Statutory Committee for unprofessional conduct and 
incompetence 

pb It is found that Mahuru Dadi Toka was dishonest in failing to 
disclose to his lawyer and the National Court in OS No. 
240 of2007 his knowledge of the compensation TEL received 
in respect of Lot 9, Section 136, Hohola, NCD. 

pb It is recommended that Mahuru Dadi Toka should be referred 
to the Royal PNG Constabulary for fraud investigation. 



II. Assessment of damages 39. On or about 21 November 2007, National 
Court conducted an ex parte hearing on assessment of damages due to non-appearance by 
the Solicitor General. 



105 



40. Further, no evidence or proper submissions were filed or made by the 

Solicitor General for the State parties in response to TEL's claim for 
damages. 

41. On 27 November 2007, the National Court entered judgment in the sum of 
K27,784,536.00 in favour of TEL, consisting substantially of past and future 
economic losses spanning 14 years from 1995 to 2008. 

42. The non-disclosure by Mahuru Dadi Toka, Toka Enterprises Ltd and John Goava 
of Sannel Lawyers of the findings discussed above were relevant to the hearing on 
the assessment of damages. 

fb It is recommended the State challenge the National Court Orders made 
on 7 June 2007 (leave), 27 June 2008 (mandamus) and 
27November2008 (damages) 

Fb It is found that Mahuru Dadi Toka was dishonest in that he did not 
disclose to his lawyer and the National Court his knowledge of the 
compensation received in respect of hot 9, Section 1 36, Hohola, 
NCD. 

pb It is recommended that Mahuru Dadi Toka should be referred to the 
Rojal PNG Constabulary for fraud investigation. 



fb It is found that Neville Devete and Gaure Odu were 

negligent in not preparing adequately nor appearing at all 
for the heating on assessment of damages. 



106 



pb It is recommended that Neville Devete and Game Odu should be 
referred to the - 

o Lawyers Statutory Committee for unprofessional 

conduct and incompetence o Departmental Head of Department of 
Justice & Attorney General on a charge of being negligent or careless 
in the discharge of their duties 

III. Steps taken (or not taken) by Solicitor General in defence of the 
claim 

i 

As examined above, cleariy there is ample evidence of serious failures on the part of 
the Solicitor-General, Mr Neville Devete and the action officer Mr Gaure Odu in 
the performance of their respective professional duties as lawyers for the State 
because they did not: 

(a) raise the obvious flaws in TEL's Notice of claim in respect of the Claims 
By and Against the State Act 1996; 

(b) seek instructions from the relevant DLPP officers - 

(i.) prior to TEL's application for leave to apply for judicial review 
despite having appeared as early as 25 May 2007 for all the defendants; 
(ii.) between 17 August 2007 and 27 June 2008 for the 

judicial review hearing; (iii.) between 28 June 2008 and 21 
November 2008 for the hearing on assessment of TEL's damages. 



107 



(c) raise various discrepancies of there being no liability or grounds available 
for judicial review against the named defendants, including the State; 

(d) ensure the file was transferred to and conducted by another lawyer when 
the lawyer in carriage was on circuit or unavailable for any reason; 

(e) prepare adequately or at all for any of the hearings nor appear for the 
hearing on assessment of damages 

(f) providing any advice to the Secretary, DLPP and Registrar of Tides in 
respect of discrepancies of mandamus orders obtained by TEL and 
parcels available for tide to be issued to TEL 

(g) consider the prospects of challenging the National Court orders in the 
nature of mandamus and the subsequent award of K27 million in 
damages before the time limited to do so expired. 

(h) brief the Attorney General on the prospects of an appeal or setting aside 
the order in the nature of mandamus and the subsequent award of K27 
million in damages before the time limited to do so expired. 

Further, no evidence or submissions were filed in response to TEL's claim for 
damages. 



fb It is recommended that Neville Devete and Gaure Odu 
should be referred to the: 



108 



o Lawyers Statutory Committee for unprofessional 

conduct and incompetence 
o Secretary, Department of Justice & Attorney General on 
a charge of being negligent or careless in the discharge 
of their duties 

R/ It is recommended that an inquiry be conducted into the 
Office of the Solicitor General 



IV. Lack of Jurisdiction to issue TEL's UDL June 2009 

45. The National Court made orders for mandamus (27 June 2008) for DLPP 
to issue tide to parcels of land that- 

(a) no longer existed (Portion 2126); 

(b) had existing registered proprietors (Lots 9 and 11); and 

(c) had one land parcel (lot 9 - 0.8670 hectares) previously 
replaced by way of compensation for another larger parcel of 
land (Portion 2125 - 2.8746 hectares). 

46. Thus, the decision by the DLPP to issue parcels of land over the same area 
irrespective of the change in its legal description and area was a breach of 
the Court Orders. 

47. Further, TEL's UDL June 2009 is invalid as it was obtained in breach of 
the procedures under Division X of the hand Act 1996. 

48. Moreover, the term of TEL's UDL June 2009 is for a term of five (5) years 
commencing 1 1 June 2009, but erroneously records the expiration date as 



109 



51. 10 June 2104 (a term of 95 years). This was an error as acknowledged 

by 

the Secretary, DLPP, Registrar of Tides, Mahuru Dadi Toka and 

pb It is recommended that the Registrar of Titles take all steps 

necessary to cancel TEL's UDL June 2009 for breach of the 
Court Orders made 27 June 2008 (mandamus) and Division 
10 of the Land Act 1996 

Fb It is recommended that the Registrar of Titles take all steps 
necessary to correct the year on which TEL's TEE UDL 
June 2009 will expire to read "2014" 



pb It is recommended that an inquiry be conducted into the 
Department of Lands <& Physical Planning 

V. Processing of claim and Pay-out 

49. There has been no payment in respect of this matter. At this stage, this 
aspect does not arise for consideration. 

50. The Commission notes that on 1 1 September 2009 Neville Devete, 
Solicitor General has endorsed the Certificate of Judgment stating that "the 
State proposes to take further action in this matter and satisfaction ofjudgement cannot 
takeplace". 

G. RECOMMENDATIONS 



From the evidence received by the Commission, the recommendations are 
as follow: 



110 



Referral to the A.ttornej General 

1. Challenge the National Court orders made on 7 June 2007 (leave); 27 

June 2008 (mandamus); and 27 November 2008 (K27 million in 
damages) on the following basis - 

a. TEL's notice of intention to make a claim against the State was invalid; 

b. PNG Land Board's grant of the TEL 1989 TSL to TEL was invalid 
from the beginning; 

c. ' TEL had no existing right to a TSL or UDL as at 16 February 1994 
because its TEL 1989 TSL had expired on 16 February 1994; 

d. There was no land described as Portion 2126 as at 27 February 2003 

e. OS No. 240 of 2007 filed on 3 May 2007 by TEL was statutory time 
barred by seven (7) years and two (2) months; 

£ NBC, ECM and LDS were three (3) persons with proprietary interests 
in parcels of land within the TEL 1989 TSL, but they 

had no knowledge of TEL's claim and were never afforded an opportunity to 
be heard; 

g. TEL and its lawyer did not give disclosure of TEL receiving Portion 109 
(later 2251) as compensation for Lot 9, Section 136 



2. Appropriate investigative and disciplinary action against Neville 

Devete and Gaure Odu for their gross negligence in protecting the 
interests of the State 



111 



Referral to the Registrar of Titles through the office of 
Secretary, Department ofLands <& Physical Planning 

3. Issuance of summons to TEL to deliver the instrument in respect of 
Urban Development Lease, Volume 34, Folio 173, over lands 
described as Portion 2534, 2535, 2538, 2539 & 
(DC/136/019)(CONS), Granville, Moresby, NCD, containing an 
area of 6.227 hectares (TEL UDLJune 2009') to: 

a. Amend the year of expiry to read "2014" 

b. Cancel the TEL UDLJune 2009 for being issued in error 
(inconsistent with Court Order made 27 June 2008 and breach 
of Division X of Land Act 1996) 

Referrals to the Lawyers Statutory Committee 

4. Neville Devete, Solicitor General for unprofessional conduct and 
failing to be competent in all his professional activities in ensuring the 
State interests were protected 

5. Gaure Odu, action officer for unprofessional conduct and failing to 
be competent in all his professional activities in ensuring the State 
interests were protected 

6. John Goava of Sannel Lawyers for dishonest, dishonourable, 

improper and unprofessional behaviour, and for failing to be 
competent in all his professional activities in assisting the Court 

Referrals to the Rojal PNG Constabulary 



112 



7. Mahuru Dadi Toka for investigation on possible fraud 
Referrals to the Prime Minister 

8. Appoint a Commission of Inquiry into the Department of Lands & 
Physical Planning 

9. Appoint a Commission of Inquiry into the Office of Solicitor General 

Consequential legislative or other reform 

10. Attorney General 's Act 1989 be amended to the following effect: 

a. the Solicitor General must be a lawyer of high standing and at least with 
10 years litigation experience 

b. the Solicitor General to be appointed by Judicial Legal Services 
Commission 

1 1 . Claims By & Against the State Act 1996 be amended to the following 
effect: 

a. Notice of intention to make a claim against the State under Section 5 to 
be given to the extent damages is sought 

b. Section 5 notice to be given to all State agents named as defendants 

c. Section 5 notice to be given to IRC to assess arrears in tax payable, if any 

d. Originating process (including statement of claim or in support) to be 
served on all the State agents named as defendants before any hearing 



113 



12. Land Act 1996, related legislation and instruments be amended to the 
following effect: 

a. All Urban Development Leases shall not be exempted from 
advertisement for application or public tender 

b. Exemption of all State land from advertisement for application or public 
tender shall be determined by a Land Exemption Committee consisting 
of the Minister, Secretary, DLPP and State Solicitor who must all agree; 

c. Register of all leases, licenses and interests granted by the State to be 
created, kept and maintained by an officer appointed by the Secretary, 
which shall detail: 

i. The name of the proprietor and date of acquisition; 

ii. Nature of interest/type of lease/license; 

iii. Zoning status of parcel of land; 

iv. Status of covenants and caveats registered, if any. 

d. PNG Land Board shall consult Register of all leases, licenses and interests 
granted by the State before considering application for a particular State 
lease 

13. Public Services (Management) Act 1995, related legislation and instruments be 
amended to the following effect: 



a. Prescribe "serious disciplinary offence" is committed where: 
i. State line agency named as defendant fails to provide full 
and proper instructions to SG 



114 



ii. State suffers loss as a result of negligence or failure to 
exercise due care in performance of duties 

b. On a finding of "serious disciplinary offence" - 
i. Ground for termination 
ii. Ineligible for appointment to any public office 



115 



"Peter Yama 

PARTIES: 

(i) For the State: 

(a) Department of Lands & Physical Planning ("DLPP") 

(b) Department of Justice and Attorney General ("DJAG") 

(c) Department of Finance ("DoF") 

(ii) Claimant: 

(i) Mr. Peter Yama 

NATURE OF CLAIM: 

Peter Yama alleged that between 1990 and 1999 the Secretary for Lands Physical 
Planning and The State breached their duties to him as a registered proprietor of a 
State lease in Madang when third parties asserted competing interests and prevented 
him access. 

Peter Yama commenced proceedings seeking damages against the Secretary for 
Lands & Physical Planning and The State, which were purportedly settled by Deed of 
Setdement. 

DOES THE MATTER FALL WITHIN THE TERMS OF REFERENCE 

In or about July 2008, the Secretary for Justice & Attorney General, Hitelai Kiele- 
Polume referred to this Commission the Solicitor General file (SG 392/2008) on the 
National Court proceedings referenced OS 371 of 2008 



116 



involving Peter Yama -v- Gabriel Yer, Secretary for Finance; Leonard Louma, 
Chief of Staff, Department of Prime Minister; and The State. 

OS 371 of 2008 concerned a Deed of Setdement executed on 28 November 2002 
between Zacchary Gelu as Solicitor General on behalf of the State and Peter Yama. 
The Deed of Setdement was for the amount of K15.5 million and purported to setde 
an earlier proceedings WS 1315 of 2002 filed by Peter Yama against the Secretary for 
Lands & Physical Planning and The State in which he sought damages in the sum of 
K38,690,000.00. 

Peter Yama collected a cheque from the Department of Finance in the sum of K7.75 
million pursuant to the Deed of Setdement, and obtained orders in OS 371 of 2008 
enforcing the Deed of Setdement when clearance for payment of the cheque was 
stopped. Those orders were appealed against in Supreme Court proceedings styled 
SCA 53 of 2008 in which interim stay orders have since been granted pending 
determination of the appeal. The Supreme Court heard the substantive appeal on 
Friday, 4 September 2009 and has reserved for decision. The Commission is a party 
(fourth appellant) in the appeal. 

In the circumstances, this matter falls within Terms of Reference No. 1, 5, 8, 
10,12,13 and 14. 



117 



D . SOURCES OF INFORMATION AND DOCUMENTATION 

1 . The brief comprises information obtained from all persons considered by 

the Commission as having an interest in the inquiry into this matter, in 
particular:- 

(a) National Court Registry - 

(i) Supplementary file referenced WS 1315 of 2002 

(ii) Original Court file referenced OS No. 317 of 2008 
(ii) Office of Attorney General & Solicitor General - 

(i) Original file SG 392/2008 

(i) Evidence of - 

(c) Dr Allan Marat, Minister for Justice & Attorney 
General 

(d) Neville Devete, Acting Solicitor General 

(e) Laias Kandi, Deputy Solicitor General (Courts) 

(f) Hitelai Kiele-Polume, Secretary for Justice & 
Attorney General 

(iii) Department of Lands & Physical Planning - 
(ii) Land files for - 

o Lot 38, Section 68, Madang 

o Lot 39, Section 68, Madang 

(i) Evidence of Pepi Kimas, Secretary 

(iv) Department of Finance — 

(i) Gabriel Yer, Secretary for Finance 

(i) Melton Bogege - Senior Accountant - Accounts Payable 
(ii) Robert Saplos, Commitment Clerk - Accounts Payable 
(iii) Yeme Kaivila, Certifying Officer - Accounts Payable 

118 



(v) John Kumuro, former Acting Solicitor General 
(vi) Zacchary Gelu, former Solicitor General 
(vii) Francis Damem, former Attorney General 

2. The relevant transcripts of proceedings are provided with this Brief. 

3. The following critical witnesses were provided an opportunity to assist the 
Commission with its inquiries but did not do so: 

(a) Department of Finance — 

(i) Doriga Henry, Acting Deputy Secretary — Operations 
(ii) Josephine Dinnie, Acting Assistant Secretary - Financial 

Controller 
(iii) Pauline Nuau, Acting First Assistant Secretary - Cash 

Management & Expenditure Control Division 
(iv) Loretta Kila, Accountant — Expenditure 

(b) Peter Yama 

4. The critical evidence given by each of these witnesses is discussed where relevant in 
the course of the findings (F) of this Brief. 

E. BRIEF FACTS 

1987 

1 On 8 October 1987, Section 68 Allotment 38, Madang was subdivided into two 

(2) separate allotments namely, Allotments 39 



119 



1989 



2002 

3 



J 



and 40 upon registration by the Surveyor General of the Survey Plan 
No. 12/245 completed on 9 November 1970 by Allen James Brown. 
[Annexure "D" to Affidavit of Pepi Kimas marked "LD 1".] 



On 28 June 1988, Peter Yama was registered as the proprietor of the land 
described as Section 68 Allotment 39, Madang in State Lease Volume 110 
Folio 86. The Lease was for 99 years commencing from 27 June 1988. The 
improvement covenant was to a minimum value of Kl 00,000.00 by 27 June 
1989. 



By letter dated 15 July 2002 to the Acting Solicitor General, Poro Lawyers 
gave notice of Peter Yama's intention to make a claim against the State "for 
damages and economic loss and breaches of Terms and Conditions of a business Tease granted 
to him" in respect of Allotment 39 Section 68, Madang. That notice was based 
on the alleged failure of the State through the Department of Lands and 
Physical Planning to address the landowner issues and disturbances caused to 
Peter Yama by the landowners of Yabob village in respect of Section 68, Lot 
39, Madang. 



By letter dated 25 July 2002 to Poro Lawyers, Mr Zacchary Gelu, Solicitor 
4 General accepted their letter dated 1 5 July 2002 notice under Section 5 of the 

Claims By <& Against the State Act 1996, and stated that he would seek 
appropriate instructions from the Department of Lands and Physical 
Planning. 

On 9 August 2002, Poro Lawyers filed a Writ of Summons No. 1315 of 2002 
endorsed with a Statement of Claim on behalf of Peter Yama. 



120 



The State was named as the First Defendant and Pepi Kimas, Secretary for 
Lands & Physical Planning was named as the Second Defendant. Essentially, 
the claim was for liquidated damages in the sum of K38, 690,000. 00 for 
business income and economic loss suffered resulting from the Secretary, 
Department of Lands & Physical Planning's failure - for which the State was 
alleged to be vicariously liable - in resolving traditional landowner issues in 
respect to Section 68 Lot 38 in the town of Madang. 

By letter 4 September 2002 to Poro Lawyers, the Solicitor General Zacchary 
Gelu stated that having (1) been served with the Writ of Summons No 1315 
of 2002 on behalf of the State and the Secretary for Lands and Physical 
Planning and (2) the opportunity to study the pleadings "and other relevant 
information and the negotiations we had\ he formed the view that the matter "can be 
appropriately settled out oj court". 



Zacchary Gelu relied on 4 grounds in support of his position and offered 
K15.5m as setdement. In respect of the first ground, Zacchary Gelu found 
that Peter Yama had indefeasible title. As to the second ground, the State 
through the Minister for Lands & Physical Planning granted Peter Yama the 
lease "without due regard to the landowner issues which have affectedyour clients (sic) ability to 
cany out commercial activities on Lot 39 Section 68, Town oJMadang" 

With regard to the third ground, Zacchary Gelu noted Peter Yama's claim for "interest, 
damages, economic losses, future economic opportunities, stress and hardship" arising from the 
State's failure in ensuring that Peter Yama has "access to quiet possession of the property in 
order to comply with the Terms and Conditions of the Lease. " 



121 



10 In relation to the fourth ground, Zacchary Gelu stated that in light of the 
claim being for K38,690,000.00 he considered that the parties can negotiate 
and reach agreement. 

11 A Deed of Setdement dated 28 November 2002 was then executed between 
Peter Yama and the Solicitor General, Mr Zacchary Gelu on behalf of the 
State, in the sum of K15.5 million ("The Deed"). The Deed recited WS 1315 
of 2002, but referred to Lot 39 of Section 68, being a different portion of land 
to that pleaded in the said proceedings. 



2008 

12 By letter dated 5 May 2008 to Secretary for Finance, Poro Lawyers 

essentially made demand for payment of K15.5 million pursuant to 
the Deed of Settlement dated 28 November 2002. A copy was 
circulated to the Solicitor General. 

13 By letter dated 29 May 2008, the Acting Solicitor General, Neville Devete, gave 

clearance for payment of K15.5 million pursuant to the Deed of Settlement 
dated 22 November 2002. 

14 On 24 June 2008, Department of Finance drew a cheque no. 880355 in the sum of 

K7.75 million payable to Peter Yama. On the same day, Peter Yama collected 
the said cheque from Ms Kila, Expenditure Control Branch from the Pay 
Office at Vulupindi Haus on the second floor. 



1 5 On 25 June 2008, Doriga Henry, Caretaker Secretary placed a stop 

payment on Cheque No. 880355 for K7.75 million payable to Peter 
Yama, until further notice. 



122 



16 On 26 June 2008, Doriga Henry, Caretaker Secretary uplifted the stop 
payment issued on 25 June 2008 in respect of cheque number 880355 for 
K7.75 million payable to Peter Yama. 

17 On 26 June 2008, Leonard Louma, Acting Chief of Staff, Office of Prime 

Minister conveyed written direction on behalf of the Minister for Finance and 

Treasury to put a stop payment to the cheque issued 
. to Peter Yama. 

18 On 27 June 2008, Peter Yama deposited cheque number 880355 for K7.75 
million into his personal account at ANZ (PNG) Ltd, but funds were not 
cleared by Bank of PNG due to the stop-payment on the said cheque. 

19 On 2 July 2008, Peter Yama filed Originating Summons styled number 371 of 
2008 in the National Court seeking Orders to declare the liability of the State 
under the deed of settlement, and compelling the State to pay the sum of 
K15.5 million. 

20 The very next day after filing of the proceedings (i.e., on 3 July 2008) Peter 
Yama obtained an Order in the National Court compelling the State to clear 
the cheque in the sum of K7.75 million, forthwith. 

21 The next consecutive day on 4 July 2008, after entry of the Order, payment 
not having been made, Peter Yama brought contempt proceedings against 
Gabriel Yer, Secretary for Finance for contempt of the Order for payment 
Those proceedings are part heard before the National Court. 



123 



22 On 8 July 2008, the Secretary, Department of Finance; Chief of Staff, 
Prime Minister's Department and the State filed an appeal (SCA No. 
53 of 2008) against the National Court Order of 3 July 2008. The 
Supreme Court stayed that Order, the contempt proceedings and OS 
371 of 2008 in the National Court since 9 July 2008 pending 
determination of the appeal. 

23 On 26 August 2008, the Chief Commissioner was joined as the 
Fourth Appellant in SCA 53 of 2008. 

24 On 24 October 2008, the State filed Originating Summons styled 658 
of 2008 challenging the validity of the Deed of Settlement dated 28 
November 2002. This action is pending determination. 

2009 

25 The Supreme Court heard the substantive appeal on Friday, 4 
September 2009 and has reserved for decision. The Commission is a 
party (fourth appellant) in the appeal. 

FINDINGS 

I. Liability In Issue 

(i) Non-compliance with Sections 5 and 21 - Claims Bj and 
Against the State Act 1996 

1 Poro Lawyers wrote a letter dated 15 July 2002 addressed to the 

Acting Solicitor General, Mr John Kumora, giving notice of Peter 
Yama's intention to make a claim against .the State (Notice of claim'). 



124 



Upon examination of the Notice of claim the Commission notes Peter Yamagave "notice of 
his intention to sue the State for damages and economic loss and breaches of Terms and 
Conditions of a Business Lease granted to him" in respect of property described as Lot 39, 
Section 68, Madang 

Peter Yama's claim was against the State and the Secretary, Department of 
Lands and Physical Planning. He was required by Section 5 of the Claims By 
<<& Against the State Act 1996 (Claims Acf) to give notice of his claim to either 
the Attorney-General or the Solicitor-General. He gave notice in writing on 
or about 15 July 2002 by hand-delivering the Notice of claim setting out the 
nature of his claim to the secretary to the Office of Solicitor-General. 
Therefore, he complied with Sections 5(1) and 5(3) of the Claims Act. 

As to the cause of action, the Notice of claim is not immediately clear. The 
Notice of claim essentially states that Peter Yama has suffered economic loss 
and damages from non-compliance with the terms and conditions of the 
lease as a result of the Department of Lands & Physical Planning's failure to 
address and resolve the land owner issues despite Peter Yama's requests to 
that Department to do so. The only condition of the lease referred to was the 
covenant obligating Peter Yama to erect improvement to a minimum value of 
Kl 00,000.00. At best the claim, it seems, was in the nature of breach of 
contract: see Section 5(2)(b) of the Claims Act. 

No further period for giving notice of intention to make a claim has been 
allowed by the Principal Legal Adviser or the National Court (see Sections 
5(2)(c) and 2 1(2) (a) and (b)). Therefore, the question is whether he gave 
notice of his intention to make a claim within six 



125 



months after the occurrence out of which the claim arose (if the occurrence 
took place after the coming into operation of the Act) or within six months 
after the coming into operation of the Act (if the occurrence took place before 
the Act coming into operation). 

6 The only date referred to in the Notice of claim is 27 June 1988, being the 
commencement of the lease. To that extent, Peter Yama should have given 
notice of his intention to make a claim against the State by 20 August 1 997 
pursuant to Section 21(2) of the Claims Act. He did not give notice until five 
years and nine months after that, in May 2003. 

7 Peter Yama's Notice of claim breached the Claims Act and was, therefore, 
invalid. He failed to comply with a mandatory procedural requirement. 

8 By reference to the statement of claim in WS 1315 of 2002 for purposes of 
giving notice under the Claims Act, there are three alleged instances that gave 
rise to Peter Yama's cause of action, the first in 1990, the second in 1992 and 
the third in 1999. Peter Yama had she months from those "dates" to give 
notice under the Claims Act. 

9 In relation to the first and second instances, they accrued prior to the 
commencement of the Claims Act. Thus, Peter Yama had to give notice no 
later than 20 August 1997, being six months after commencement of the 
Claims Act on 20 February 1997: Section 21(2) of the Claims Act. 



126 



10 Peter Yama did not give notice of his intention to make a claim against the 
State until 15 July 2002. This was over 4 years and 11 months after the 
mandatory time period. 

11 For the third instance in 1999, Peter Yama needed to give notice of his 
intention to make a claim against the State by (at the latest) a date in the year 
2000. Peter Yama failed in this regard and was out of time by at least eight (8) 
years. 

12 Most importandy, what Peter Yama needed was extension of time to give 
notice . This is required by Section 5(2)(c) of the Claims Act, which provides 

"a notice under this section shall be given within such further period as the Principal Legal 
Advisor or the Court before which the action is instituted, on sufficient cause being shown, 
allows. " 

13 A number of discrepancies are evident: 

(a) The Notice of claim is not a request for extension of time to give 
notice. Clearly it is actual notice of intention to enforce a claim. 
Without extension of time being granted by the Attorney General or 
the National Court, Peter Yama could not lodge a valid notice of his 
intention to make a claim against the State. 

(b) Further, any suggestion by Peter Yama that the Notice of claim can be 
deemed to be a request for extension of time is again flawed as it is 
addressed to the Acting Solicitor-General when it should have been 
addressed to the Principal Legal Adviser, 



127 



which is the Attorney-General (section 3 Attorney-General Act 1989). 

(c) Peter Yama's position is further compounded by the fact that the letter 
from the Acting Solicitor General "accepting" his Notice of claim: 

(i) does not grant an extension of time; and further 

(ii) was signed by Zacchary Gelu as the Solicitor-General when it 

should have been issued by the Attorney- General as Principal 

Legal Adviser. 

14 The Solicitor General, Zacchary Gelu, wrote a letter dated 25 July 2002 to Poro 
Lawyers in which he acknowledged receipt of their Notice Letter and stated 
"the notice is accepted to enable jour client to proceed. I will seek appropriate instructions from 
the Department of hands <& Physical Planning. We note in passing Zacchary Gelu 
never sought nor obtained instructions from the Department of Lands & 
Physical Planning. That issue is further analyzed later in detail. 

(ii) No cause of action 

15. The Statement of Claim endorsed to the Writ of Summons No. 1315 of 2002 
pleaded Allotment 38 however, as at the date of filing of the Writ, Mr Kimas 
has confirmed that there was: 

(a) no allotment 38 at all (it had been subdivided to form Allotments 39 and 

40) 

(b) no allotment 38 owned by Peter Yama. 



128 



16. The statement of claim as pleaded does not disclose a cause of action as 
against the Secretary for Lands & Physical Planning and or The State. It is 
patendy clear that the remedies available in law are for Peter Yama (as the tide 
owner) to assert his tide and claim orders (among others) for eviction, 
trespass and the like, and restrain any further harassment or impediment to 
his legal right to undisturbed occupation and development of his land. 
Further, to the extent that the pleadings related to the alleged breaches by the 
Secretary for Lands & Physical Planning there is no specific reference to the 
relevant clauses of the Lease or the provisions of any legislation. 

17. In addition, Peter Yama alleges the Land Titles Commission issued a 
restraining order. We note the Land Titles Commission has no such 
jurisdiction only the Land Court. Further, the area of land seems generalized 
which is unusual. 

18. If anything, Peter Yama's cause of action is purely against the "customary 
landowners" whom he alleges prevented him from access to his land. 

(iii) Action time barred 

19. The statement of facts pleaded to give rise to Peter Yama's causes of action 
render his action time-barred. Section 16 of the Frauds <<& limitations Act 1988 
required Peter Yama to commence his action within six (6) years from the 
date his cause of action arose. 

20. Peter Yama states that after being issued title to Allotment 38 on 28 
November 1988, he attempted to move in and develop his land but was 
prevented from doing so by disgruntled traditional landowners on two 
occasions, firstly in the year 1990 (time for commencement of 



129 



legal action expired 1996) and again in the year 1992 (time for commencement 
of legal action expired 1998). 

21. Peter Yama then alleges that some seven (7) years later in 1999, restraining 
orders were taken out against him by a named tribe. No actual dates are stated. 
In our view, this third instance is designed to circumvent the 6 year time 
limitation as the Writ was filed on 9 August 2002. 

(iv) Lease Rental Arrears 

22. At the time of filing of the Writ of Summons (9 August 2002), Peter Yama 
had a sum of K41,214.86 in outstanding annual rentals to the State in respect 
of his lease over Section 68 Lot 39, Madang. 

23. The outstanding arrears would have been relevant for purposes of pleading a 
cross-claim and even a ground for setting in motion the forfeiture provisions 
under section 122 of the luindAct 1996. 

24. As at 2008, Peter Yama's arrears stand at K61,014.86, which equates to 
approximately 18 years of unpaid rent i.e., since 1990. 

(v) Stale Writ 

25. The Secretary for Lands & Physical Planning Mr Pepi Kimas, who is named as 
the Second Defendant in National Court proceedings WS 1315 of 2002, has 
given evidence orally and in writing by his letter of 1 August 2008 that the 
records in his Office confirm that the Office of Secretary for Lands & 
Physical Planning was never served with a sealed copy of the Writ of 
Summons. 



130 



26. Further, Mr Kimas has no recollection whatsoever of the said proceedings or 
of being personally served with the Writ. In addition, he only came to know 
of the existence of the proceedings through a letter dated 1 6 th July 2008 from 
the Chief Commissioner. 

27. In this regard, we note that there is no affidavit deposing to service of the 
originating process in the WS 1315 of 2002 supplementary Court file. 
Consequently, the Writ of Summons became stale as of 9 August 2004. 

28. In these circumstances, it is our strong view that liability should have been 
disputed by the State on that basis in WS 1315 of 2002. 



II. Assessment of damages 

29. As the matter was settled out of Court, the Court did not make findings on the 
amount of damages to award Peter Yama. Nevertheless, the issue on the out 
of court settlement and the related processes is examined further under clause 
4 below. 

III. Steps taken (or not taken) by Solicitor General in defence of the claim 



(i) Zacchaty Gelu 
30. Clearly, there is ample evidence of serious failures on the part of the Solicitor- 
General, Zacchary Gelu, in the performance of his professional duties as lawyer for 
the State because: (a) there was no liability on the part of the State or the Secretary, 
Department of Lands & Physical Planning, as we have found above; and 



\ 



131 



(b) there was no actual or proper assessment of damages, if any, to justify 
K15.5 million as the settlement figure. 

31. Zacchary Gelu breached his duty of care to his clients (Secretary for Lands & 
Physical Planning and the State) as a lawyer. He failed to perform (or properly 
perform) due diligence as to the claim by Peter Yama by not seeking 
instructions from the Secretary, Department of Lands & Physical Planning 
when the purported Notice of claim was initially given, and then again upon 
service of the originating process until execution of the Deed of Setdement 
dated 28 November 2002. 

32. As a result, Zacchary Gelu failed to take all steps necessary to defend the State 
and the Secretary, Department of Lands & Physical Planning by NOT :- 

(a) seeking any instructions from- 
(i) Secretary, DLPP; 

(ii) Registrar of Titles; 
(iii) Attorney General; 
(iv) Land Tides Commission; 

(b) conducting any due diligence, including searches or making relevant 
inquiries with the above offices; 

(c) filing a notice of intention to defend; 

(d) filing a defence for the State parties on the following merits: 

(i) Lack of mandatory notice under Section 5 of the Claim Act-, 
(ii) Peter Yama's claim did not disclose a reasonable cause of action 
against the State nor Secretary, DLPP, as his claim 



132 



was against the landowners for committing the unlawful acts 

complained of; 
(iii) Peter Yama did not have a claim because- 

o he was not the proprietor of Lot 38 Section 68 Madang; o no 

such lot existed since 1987; 
(iv) Peter Yama's claim was time barred by Frauds & limitations Act 

1988; 
(v) At the time of filing of his claim, Peter Yama had a sum of 

K41,214.86 in outstanding annual rentals owed to the State in 

respect of Section 68 Lot 39, Madang 
(vi) " Peter Yama had not complied with the improvement covenant 

of the State lease in respect of Section 68 Lot 39, Madang 
(vii) The outstanding arrears would have been relevant for purposes of 

bringing a cross-claim against Peter Yama and even a ground for 

setting in motion the forfeiture provisions under section 122 of 

the IjindAct 1996 
filing an appropriate application to dismiss the entire claim for- 
(i) lack of notice under Section 5 of the Claims Act 
(ii) disclosing no reasonable cause of action against The State and 

Secretary, DLPP 
(iii) being time barred under Section 16 of the Frauds <<& Umitations 

Act 1988; 
providing any advice to the State parties on the veracity of Peter 
Yama's claim and any recommendations on the way forward to 
defend the claim; 

seeking any independent advice on the professional reports and 
material relied upon by Peter Yama in support of his claim; and 



133 



/ 



(h) providing any advice to the Secretary, DLPP to take steps to 

seek forfeiture of Peter Yama's tide in respect of Lot 39, Section 
68, Madang. 

(it) Neville Devete <& Laias Kandi 

31. Both Neville Devete and Laias Kandi conceded that their clearance 
letter dated 29 May 2009 issued to the Department of Finance for 
payment of the Deed of Setdement dated 28 November 2002 was 
given in error for the reasons set out above. 

IV. Setdement 

32. As a result of the finding that liability should have been disputed 
based on the foregoing reasons, it follows in our view that this case 
was not an appropriate matter for settlement out of Court. 

I Furthermore, Zacchary Gelu as Solicitor General clearly failed in his 
/ professional duty to seek and obtain instructions from the Secretary, 
I Department of Lands & Physical Planning in order to properly 

evaluate the relative strengths and weaknesses of Peter Yama's claim 
and the State's defence before entering into any settlement 
negotiations with Peter Yama. 

33. In addition, no such instructions were provided by DLPP to Zacchary 
Gelu to commit the State by signing the Deed of Release. 

34. Moreover, the Commission has not sighted any quantum submissions 
made by or on behalf of Peter Yama to the Solicitor General. 



1 35. In the circumstances, the 4 grounds relied upon by Zacchary Gelu in 
offering settlement was baseless and patently flawed. 



134 



36. In respect of the execution of the Deed of Setdement dated 28 November 
2002, the Commission notes that there was lack of compliance with: 

(a) Section 61 of the Public Finances (Management) Act 1995 

contracts involving the payment of an amount exceeding Kl 00,000 
require the approval of the Minister for Finance. No approval was 
sought nor obtained from the Minister for Finance through the 
Secretary for Finance prior to the signing of the Deed by Zacchary 
Gelu. 

(b) NEC Decision NG07 22 August 2002, Clause 10 - The National 

executive Council at its meeting on 22 August 2002 (some 4 months prior to 
signing of the Deed of Settlement) - " directed that there be no more out of court 
settlements by any State body or authority, including by the Attorney-General and 
Solicitor-General, without the approval of the NEC, acting on advice ofCACC. " 

37. The Secretary to NEC, Department of Prime Minister, Ms Winnie Kiap, gave 
oral evidence that no approval was sought nor obtained in accordance with 
that NEC Decision. Therefore, no such approval was given prior to the 
signing of the Deed by Zacchary Gelu. 

V. Processing of claim and Pay-out 

38. Based on the Department of Finance Internal Audit and Compliance Division Report 
dated 11 August 2008, produced to the Commission by the Secretary for 
Finance, Gabriel Yer, we note the following procedures were not followed: 



135 



No clearance letter from Attorney General as required by NEC Decision 
21/2006, Item 7(e)®. Instead, clearance letter dated 29 May 2008 by 
Acting Solicitor General (Mr Devete) to the Secretary for Finance, which 
states on page 5 that he enclosed Peter Yama's notice under Section 5 of 
the Claims Act dated 15 July 2002. This is clearly an error. 

The purported clearance letter was hand delivered to Department of 
Finance's Cash Management and Expenditure Control Branch on 30 th 
May 2008. However, that letter did not have a "batch number" and was 
registered as having been delivered to the Secretary for Finance's office 
three days earlier, 26 May 2008. This is inconsistent with the established 
processes and controls put in place by both departments. Any legal 
clearance made on court orders or any claim against the State is given 
batch numbers as a control mechanism. 

The FF3 and FF4 were signed well after the cheque (number 88055 in 
the amount of IC7,750,000.00 payable to Peter Yama) was printed on 24 
June 2008. The cheque was raised without signatures of Commitment 
Clerk, Section 32 Officer, Certifying Officer, Examiner, and Financial 
Delegate on the FF3 and FF4. 

The Section 32 Officer "approved" the expenditure in breach of NEC 
Decision No. 150/2003, Items 4 and 6, and NEC Decision No. 
21/2006, Item 5(b) & (e)(ii). 

The cheque was collected on the same day (24 June 2008) by Peter 
Yama from the Department of Finance and not the Solicitor General 
based on verbal instructions from Mr Kaindi 



136 



of Solicitor General's office. There are no financial instructions that deal 
with collection of cheques. However, internal control systems in place 
by Cash Management and Expenditure Control Division and Office of 
the Solicitor General is that all cheques are to be collected by 
representative of Solicitor General. 

(vi) Peter Yama's claim was processed expeditiously with special interest by 
Department of Finance and possibly the Solicitor General's Office. 

(vii) The cheque payment was made out of legally available funds. 

G. RECOMMENDATIONS 

From the evidence received by the Commission, the recommendations are as follow: 
Referral to the Attorney General 

1. Continue pursuing current action (OS 658 of 2008) against Peter Yama challenging 
the legality of the Deed of Settlement dated 28 November 2002 on the 
following basis:- 

(a) Peter Yama's notice of intention to make a claim against the State was 
invalid; 

(b) There was no land described as Lot 38 as at 8 October 1987 as 
pleaded in WS 1315 of 2002 



137 



(c) Peter Yama's cause of action is purely against the "customary 
landowners" whom he alleges prevented him from access to his land 

(d) Part of the claim in WS 1315 of 2002 filed on 9 August 2002 by Peter 
Yama was statutory time barred by four (4) years 

(e) the Writ of Summons No. 1315 of 2002 became stale as of 9 August 
2004 as against the Secretary, DLPP due to non-service at all 

(f) lack of Ministerial approval prior to executing the Deed under Section 61 of the 
Public Finance (Management) Act 1995, and by reason of the Supreme Court 
decision in Fly River Provincial Government v Pioneer Health Services (2003) SC705 
and followed in NCD Commission v Yama Security Services Fid (2005) SC835 

2. Immediate commencement of civil action against Peter Yama to recover 
K61, 014.86 in outstanding annual land rentals 

3. Appropriate investigative and disciplinary action against Messrs Kandi and 
Devete for their gross negligence in erroneously clearing Peter Yama's claim 
for payment 

Referral to the Minister for Department of Lands & Physical Planning through 
office of the Secretary 

4. In respect of Section 68 Lot 39 Madang, issuance of a forfeiture notice to 
Peter Yama on the grounds that: 



138 



(a) the improvement covenant imposed by the lumdA-ti 1996 

has not been fulfilled 

(b) as at 2008, the annual land rental K61, 014.86 remains 

outstanding, due and unpaid for a period of well in excess 
of six months 

Referrals to the Lawyers Statutory Committee 

5. Zacchary Gelu for unprofessional conduct and failing to be 

competent in all his professional activities in ensuring the State 
interests were protected 

6. Neville Devete of Solicitor General's office for failing to be competent in all 
his professional activities in ensuring the State interests were protected 

7. Lais P Kandi of Solicitor General's office for failing to be competent in all his 
professional activities in ensuring the State interests were protected 

Referrals to the Royal PNG Constabulary 

8. Zacchary Gelu for settling Peter Yama's unlawful claim 



9. Peter Yama for making his unlawful claim 

10. Neville Devete of Solicitor General's office for clearing an unlawful claim 

11. Lais P Kandi of Solicitor General's office for clearing an unlawful claim 



139 



Referrals to the Secretary, Department of Finance 

12. Take appropriate disciplinary action against the officers identified in the Department 
of Finance Internal Audit and Compliance Division Report dated 1 1 August 2008 for 
gross negligence in protecting the interests of the State 



Consequential legislative or other reform 

13. Attorney General's Act 1989 be amended to the following effect: 

a. the Solicitor General can only act on the written instructions of the 
State departments, agencies or instrumentalities concerned, unless in 
urgent cases where oral instructions would suffice provided written 
instructions are subsequently given within a reasonable time to 
retrospectively confirm the verbal instructions previously given 

b. the Attorney General granted with the exclusive power to settle cases 
out of court with prior approval from the State departments, agencies or 
instrumentalities concerned and National Executive Council 

c. the Attorney General shall execute all deeds for settlement on behalf of 
the State and the Solicitor General shall witness his signature, failing 
which the deed is unenforceable 

d. all settlements involving the State, including Provincial Governments, 
departments, agencies or instrumentalities, has no effect unless 
sanctioned/approved by the National Court 



140 



e. Solicitor General maintain register of all such settlements 

Financial Instructions made under the Public Finance (Management) Act 1995 be amended 
to the following effect: 

a. legal clearance for all court related claims for payment shall be in writing 
from Office of Attorney General upon recommendation by Solicitor 
General 

b. the payment of court related claims by Department of Finance shall be 
based on the production of original clearance letter, which shall — 

(i) where court order for payment - 

o emanate from person occupying office of Attorney General 
o bear SG file reference number o recommend payment 

(ii) where deed of setdement for payment - 

o original duly signed Deed of Setdement bearing respective signatures of 
Attorney General on behalf of the State and the Solicitor General as his 
witness o emanate from person occupying office of Attorney General 
o bear SG file reference number 
o contains National Court order sanctioning/ approving 

settlement o 
recommend payment 



141 



Finance Form 3 be revised to- 

i. incorporate as an attachment the internal pre-audit verification 

report 
ii. cover, when necessary, withholding of tax assessed for remittance 

to IRC in respect of all claims submitted for payment 

all cheques for payment of court related claims to be 
forwarded to Office of Solicitor General for collection in the 
following circumstances :- 

where no lawyer on record - collection by the claimant in person 
provided appropriate identification is produced, such as passport, 
drivers licence or original statutory declaration; 
where lawyer on record - collection by lawyer on record. 

Solicitor General maintain a register of all — 

i. Clearance letters issued to Department of Finance 

ii. Cheques received from Department of Finance pursuant to 

clearance letter 
iii. Cheques collected from his office by claimant or claimant's lawyer 

Secretary for Finance maintain a register of all — 

i. Clearance letters received from Solicitor General 

ii. Cheques sent to Solicitor General pursuant to clearance letter 



142 



15. Claims By & Against the State Act 1996 he amended to the following effect: 

a. Notice of intention to make a claim against the State under Section 5 
to be given to the extent damages is sought 

b. Section 5 notice to be given to all State agents named as defendants 

c. Section 5 notice to be given to IRC to assess arrears in tax payable, if 
any 

d. Originating process (including statement of claim or in support) to be 
served on all the State agents named as defendants before any hearing 

e. all settlements involving the State, including Provincial Governments, 
departments, agencies or instrumentalities, has no effect unless 
sanctioned/approved by the National Court 

~luind Act 1996, related legislation and instruments be amended to the 
following effect: 

a. Register of all leases, licenses and interests granted by the State to be 
created, kept and maintained by an officer appointed by the Secretary, 
which shall detail: 

i. The name of the proprietor and date of acquisition; 

ii. Nature of interest/ type of lease/license; 

iii. Zoning status of parcel of land; 

iv. Status of covenants and caveats registered, if any. 

b. PNG Land Board shall consult Register of all leases, licenses and 

interests granted by the State before considering application for a 
particular State lease 



143 



Public Services (Management) Act 1995, related legislation and instruments be 
amended to the following effect: 

a. Prescribe "serious disciplinary offence" is committed where: 

i. State line agency named as defendant fails to provide full and 

proper instructions to SG 
ii. State suffers loss as a result of negligence or failure to exercise 

due care in performance of duties 

b. On a finding of "serious disciplinary offence" — 

i. Ground for termination 

ii. Ineligible for appointment to any public office 



144 



(c) Andrew Maid 

A. PARTIES: 

(i) For the State: 

1 . Department of Lands & Physical Planning ('DLPP') 

2. Department of Justice and Attorney General fDJAG') 

3. Department of Finance ('DoF') 

(ii) Claimant: 

(a) Andrew Maid 

B. NATURE OF CLAIM: 

1. Andrew Maid alleged the PNG Land Board Chairman; Secretary, DLPP; Registrar of 
Tides and the State ("State parties") wrongfully cancelled his land title in breach of 
his constitutional rights and their statutory duties. 

2. Andrew Maid commenced National Court proceedings against the State parties 
seeking restoration of his land title, or damages in the alternative. The claim was 
purportedly settled by Deed of Release. 

C. DOES THE MATTER FALL WITHIN THE TERMS OF REFERENCE 

1. Andrew Maid lodged separate courts claim in 2001 against the State parties for alleged 
wrongful cancellation of his land title on 10 August 2000. No determination was 
made by the National Court as to liability and damages. The claims were purportedly 
settled by Deed of Release dated 11 October 



145 



2002 in the sum of K4.1 million executed between Andrew Maid and the State 
through Zacchary Gelu, Solicitor General ('Deed'). 

2. The Department of Finance issued 16 cheques totaling K5, 193, 538. 00 in respect of 
this matter between 25 January 2003 and 30 June 2005, falling within the period 
under inquiry 2000 to 1 st July 2006. 



3. In the circumstances, this matter falls within Terms of Reference No. 1, 5, 6, 7, 8, 
9,10,11,12,13 and 14. 

SOURCES OF INFORMATION AND DOCUMENTATION 

1. The brief comprises information obtained from all persons considered by the 
Commission as having an interest in the inquiry into this matter, in particular:- 

(a) National Court — 

(i) Transcription Services Certified Transcripts for — o 21 
August 2002-Justice Davani 

oil September 2002-Justice Kandakasi o 1 3 
September 2002 - Justice Kandakasi 
(ii) Evidence of- 

o Ian Augerea, Registrar 

(b) Office of Attorney General & Solicitor General - 

(iii) Original file SG681 /01 

(iv) Evidence of — Zacchary Gelu, former Solicitor 
General John Kumura, former Acting Solicitor General Francis Damem, 
former Attorney General 

(c) Department of Lands & Physical Planning - 

(i) Land files — 



146 



o Zoning of Section 122, Hohola, NCD 
o State Lease Volume 23, Folio 182 over lot 12 Section 
122, Hohola, NCD 

o Minutes of purported PNG Land Board Meeting 

No. 2017 

(ii) Evidence of - 

o Pepi Kimas, Secretary 

o Raga Kavana, Registrar of Titles 

o Maurice Alaluku, former Secretary 

O Daniel Katakumb, Acting Director, Land 

Administration Division 

(d) Government Printing Office — 

(i) Evidence of — 

o Ken Kaiah, Government Printer 

o Samson Luka, Senior Publication Officer 

(e) Claimant — 

(ii) Evidence of - 

o Hon. Andrew Maid, MP 

o Peter Pena, lawyer, Peter Pena & Associates 

o Jeffrey Abone, lawyer, Parkil Lawyers 

2. The relevant transcripts of proceedings are provided with this Brief. 

3. The critical evidence given by each of these witnesses is discussed 
where relevant in the course of the findings (F) of this Brief. 

CHRONOLOGY OF EVENTS 



1992 



147 



1. On 23 January 1992, David Rutana, Para Management Agency and Andrew 

Maid agreed Mr Maid put up a tradestore next to Mr Rutana's property, on 
the vacant cut-off or reserve land. 

1993 

2. On 7 January 1993, a Memorandum of Agreement was entered into between 
Andrew Maid as Piunawuin Trading and J.N. & DO. Rutana for- 

(a) Erection of tuckshop 

(b) "on the land as part and port of adjournment to Section 71, Allotment 
1, Henao Drive, Gordon" 

(c) Subject to review after 5 years from 1 January 1993 

(d) "this agreement shall not be revoked under any circumstances without 
consent of the said parts" 

1996 

3. On 14 February 1996, NCDC granted Andrew Maid Licence to Trade No. 

13288- 

(a) Section 71, Lot 4, Gordon, NCD 

(b) From 14 February 1996 to 13 June 1997 

(c) IC100 for licence fee, receipt no. 333091 dated 8 January 1996 

(d) (Mr Maid occupied reserved land adjacent to Sec 71, Lot 1, Geauta 
Drive, Gordon, NCD - If so, illegal as reserved land) 

4. On 11 July 1996, Kumaraswamy Arasaratnam, City Manager, NCDC wrote to 
PNT Pty Ltd, attention Andrew "Mond" - 

(a) Noted his expression of interest in Section 122, Lot 4, Geauta Drive, 

Gordon 

(b) no objection to application 



148 



(c) shown by Mr "Mond "copy of plan subdividing Section 122 and, 
presumably, open to public tender 

On 9 August 1996, Peter Vavine, Senior Physical Planner was instructed by 
Acting Regional Physical Planner to inspect Section 71, Lot 1 Gordon, NCD 
to confirm whether trade store and fence would affect the Poreporena road 
development 

On 15 August 1996, Andrew Maid lodged an application for business 
(commercial) lease over Section 71, Lot 4, Gordon, NCD and paid 
prescribed application fee of Kl 00 

On 20 August 1996, Peter Vavine wrote to the Acting Regional Physical 
Planner reporting on the inspection of Section 71, Lot 1, Gordon, NCD that- 

(a) the trade store would not be affected by the realignment of the drain 

(b) only the fence would be affected 

(c) recommended that Mr Maid — 

(i) remain on Lot 1 and formally apply for Lot 4 through the 

normal process; 
(ii) relocate to Lot 4, if the store is to be removed immediately, 

until such time he is allocated the land in the normal way; or 
(iii) remain on Lot 1, if the store is not affected, for not more than 

1 V% years to settle his loan and he is allocated Lot 4 during 

that period 

On 23 August 1996, Kumaraswamy Arasaratnam, City Manager, NCDC 

wrote to Chairman, NCD Physical Planning Board, attention Gabi Boutau, 

Physical Planner - 

149 



(a) further supporting letter and made a representation of being informed 
by Andrew Maid of his urgent request to tender for Section 122, Lot 
4, Gordon, NCD because part of Roads and Drainage Reserve he 
occupies has to be cleared for main drain construction in 1 week 

(b) of having no objection to application for commercial lease of Lot 4 
being rezoned from recreational to commercial 



9. On 3 September 1996, Andrew Maid was granted License No. 11/96 

by John A Painap, OBE, Delegate of Minister for Lands & Physical 
Planning - 

(a) Commencing from 3 October 1996 for a period of 6 months (lapse on 

6 April 1997) 

(b) For temporary occupation of Section 122, Lot 4, Gordon (Hohola) for 
trading purposes due to Geauta Drive expansion affecting the original 
site 

(c) Subject to following conditions- 

K120 licence fee 

Licence does not confer upon the licensee any right of 
ownership 

10. On 6 September 1996, John Painap, Secretary for Lands - 

(a) granted temporary approval to Andrew Maid to relocate his shop onto 

Section 122, Lot 4 (now lot 12) Gordon in view of deadline given by 
Curtain Bros; and 

(b) directed Andrew Maid to lodge application for occupancy over said 
piece of land (Lot 12) 

11. On 2 October 1996, Andrew Maid paid K120 for temporary License 

No. 11/96 over Section 122, Lot 4, Hohola, NCD 



150 



On 1 September 1997, Andrew Maid was granted License No. 20/97 
(Southern) by a Delegate of Minister for Lands & Physical Planning - 

(a) Over Section 122, Lot 12 Hohola (New) (Gordon) formerly Section 
122, Lot 4 (Gordon) Hohola, NCD 

(b) Commencing from 1 September 1997 

(c) For temporary occupancy for trading due to Geauta Drive expansion 
affecting the original site 

(d) . Subject to following conditions - 

(i) Payment of K240 licence fee; 

(ii) Land Board hearing on applications for Section 122, Lot 12, 

Hohola (Gordon) NCD formerly Lot 4; 
(iii) Forfeiture of Lots 10, 6 & 7, Section 122 currently fenced by 

Filipino Association Inc; 
(iv) Granting of leases over Lot 10, 6 & 7, Section 122 Hohola 

(Gordon) NCD; 
(v) Licence will cease after formal direct granting of lease by the 

Minister/PNGLB either before or after the expiration of the 

current 6 months licence period; and 
(vi) Licence does not confer upon the licensee any right of 

ownership 

On 3 September 1997, paid K240 for temporary licence fee granted 
by DLPP over Section 122, Lot 4, Hohola, NCD 

On 20 December 1997, Andrew Maid, Manager/ Owner, Piu Nauwin 
Trading Pty Ltd wrote to Hon. Viviso Seravo, MP, Minister for Lands 



151 



(j Referring to conditions attached to Licence No. 20.97 over Sec 

122, Lot 12, Hohola (Gordon) 
/i Seeking exemption on Sec 122, Lots 6, 7 and 10 

1998 

15. On 28 January 1998, John Tokunai, First Secretary, Ministry of Lands 
responded to Andrew Maid's letter dated 20 December 1997 - 

(a) apologised for delay in responding 

(b) stated Hon. Viviso Seravo, Minister for Lands on 19 January 1998 
granted approval for exemption from advertisement for Section 122, 
Lots 6, 7 and 10 Hohola (Gordon) NCD 

16. On 19 March 1998, Andrew Maid paid K240 for renewal of temporary 
licence granted by DLPP over Section 122, Lot 12, Hohola, NCD 



17. On 6 April 1998, Licence No. 15/98 (Renewal) was granted to Andrew Maid by a 
Delegate of the Minister for Lands and Physical Planning — 

(a) Over Section 122, Lot 12 (4), Hohola (Gordon) 

(b) Commencing from 18 March 1998 for a 12 month period (18 March 
1999) 

(c) For feasibility studies, ID surveys, fence erection for relocation of 
business from Geauta Drive affected by the Freeway Construction 

(d) Subject to the following conditions - 
(i) Payment of K240 licence fee 

(ii) Allow access to land to conduct feasibility studies 

(iii) Engage surveyor to identify land boundary 

(iv) Erection of proper steel fence around the perimeter 



152 



(v) Licence will cease after formal direct granting of lease by the 

Minister and PNG Land Board either before or after the 
expiration of the current 12 months licence period 

(vi) Licence does not confer upon the licensee any right of 

ownership 

18. On 20 December 1998, Andrew Maid, Manager/ Owner, Piu Nauwin Trading 
Pty Ltd wrote to Hon. Viviso Seravo, MP, Minister for Lands 

(a) Referring to conditions attached to Licence No. 20.97 over 

'Section 122, Lot 12, Hohola (Gordon) 

(b) Seeking exemption on Section 122, Lots 6, 7 and 10. 

1999 

19. On 26 January 1999, Andrew Maid lodged application for commercial lease 
for — 

(a) Section 122, Lot 12 (Gordon) Hohola, NCD 

(b) a proposed supermarket, including shopping centre, bottle shop, kai 
bar etc 

20. On 26 January 1999, Andrew Maid paid K240 as application fee for 
commercial lease over Section 122, Lot 12, Hohola, NCD (receipt no. 55963) 

21. On 4 February 1999, Andrew Maid paid K40 as fencing fee (NCDC Receipt 

No. 401209) 

22. On 10 February 1999, NCD Building Authority Permit No F004/99 was 
granted to Andrew Maid to build security fence on Section 122, Lot 12, 
Gordon, NCD. 



153 



23. On 23 February 1999, Certificate of Deemed Planning Permission No. CDP 
04 - 44/99 was issued to Andrew Maid for fencing on Section 122, Lot 12, 
Hohola, NCD 

24. On 6 April 1999 'Licence No. 15/98 (Renewal) was granted to Andrew Maid 
by Morris Alaluku, Secretary for Lands - 

(a) Over Sec 122, Lot 12 (4), Hohola (Gordons) 

(b) Commencing from 11 January 1999 for a 12 month period (11 January 
2000) 

(c) For feasibility studies, ID surveys and fencing 

(d) Subject to the following conditions - 

(i) Payment of K240 licence fee 

(ii) Allow access to land for feasibility study, ID surveys and 

fencing 
(iii) Engage surveyor to identify land boundary 
(iv) Erection of proper steel fence around the perimeter 
(v) Licence will cease after formal direct granting of lease by the 

Minister and PNG Land Board either before or after the 

expiration of the current 12 months licence period 
(vi) Licence does not confer upon the licensee any right of 

ownership 

25. On 15 November 1999, Notice of Exemption from Advertisement - 

(a) Signed by Dr Fabian Pok, PhD, MP, Minister for Lands 

(b) Issued to Mr Maid under Section 69(2) of the Land Act 1996 

(c) Over Section 122, Lot 12, Hohola (Gordon), NCD 

(d) Stating that Andrew Maid has a licence over this portion of land. He in 

fact has met all the requirements /conditions of the Licence to date 
and spent substantial amount of money to fence the area hence is 
operating a tuck shop business until the lease is formalised 



154 



26. On 10 December 1999, purported Handwritten PNG Land Board Meeting 

Minutes No. 2017 - 

(a) Item no. 25 

(b) Recommendations that a 99 year commercial lease in favour of 
Andrew Maid with a covenant of 3 years and Kl 00,000 of 
improvements on site 

(c) Footnote L 12 S 122, Hohola exempted by Govt 

(d) Approved 

(e) Signed by Chairman, Ralph Guise and Mrs Morea Taboro 

(f) Not signed by Deputy Chairman, Mr Tom Horik; Joseph Hau; James 

Tengen; Michael Maka 

27. Undated Land Board Meeting No. 2017 recommendations — 

(a) Item 25, DC/122/012 - Andrew Maid 

(b) Recommendations: Board recommends lease to Andrew Maid subject 
to 6 conditions, including - 

(i) Survey; 

(ii) Lease shall be used bona fide for a business (commercial) 

purpose; 
(iii) Lease shall be a term of 99 years. 

(c) Foot note: a development covenant valued at Kl 00,000 was noted 

(d) Approved by the Board (No names or details of members) 

2000 

28. On 28 January 2000, purported National Gazette No. G9 Land Board Meeting 
No. 2017 (a) at page 2 



155 



(b) Andrew Maid successful applicant of L.F. DC/ 122/01 2 - a business 
(commercial) lease over Lot 12, Sec 122, Hohola, NCD 

(c) Dated 25 January 2000 

(d) Signed by R. Guise, Chairman, PNG Land Board 

(e) (Only Secretary can publish names of successful applicants: s74 of Land 
Act 1996) 

29. On 4 February 2000, Gabriel Donump, Director Provincial Service (Land 

Admin) wrote to Mr K. Kaiah, Government Printer, attention Samson - 

(a) Referring to earlier telephone conversation with Mr Samson 

(b) Urgent request to immediately withdraw the gazettal notice under 
heading of "Land Board No. 2017 items 1-37 and Successful 
Applicants for State Lease and particulars of land leased" believed to 
be improperly brought by Chairman of Land Board 

(c) Land Board Meeting never convened, accordingly no land board 
recommendations or grants made over the parcels or portions of land 
referred to in the notice 

(d) Unprofessional and illegal action of the chairman and requests 
withdrawal of notice from printing and refer it back to Lands 
Department 

(e) Attaching Corrigendum for publication withdrawing such notice 

published in the National Gazette No.G9 of 28 January 2000. 

30. On 5 April 2000 Andrew Maid paid K360 to Department of Lands (receipt 

no. 81312) for renewal of licence fee and royalty payments over Section 122, 
Lot 12, Hohola, NCD 



156 



31. On 6 April 2000, licence No. 15/98 (Renewal) was granted to Andrew Maid 

by Guao K Zurenuoc, Secretary for Lands — 

(a) Over Section 122, Lot 12 (4), Hohola (Gordon) 

(b) Commencing from 10 April 2000 for a 12 month period (10 April 
2001) 

(c) For feasibility studies and engineering designs 

(d) Subject to the following conditions — 
(i) Payment of K360 licence fee 

(ii) Allow access to land for carrying feasibility study and 
engineering design 

(iii) Licence does not confer upon the licensee any rights of 

ownership 
(iv) Licence is non-transferable or assignable 
(v) Licence shall cease upon formal grant of the lease by the Land 

Board 

32. On 25 April 2000 Notice under s. 75 of Land Act 1996 signed by Guo R. 

Zurenuoc, Secretary for Lands & Physical Planning - 

(a) Was issued to Andrew Maid as successful applicant 

(b) Over Lot 12, Section 122, Hohola (Gordon) 

(c) In National Gazette dated 28 January 2000 

(d) Payment of K4,830 being amount due on proposed lease 

33. On 27 April 2000 - 

(a) Notice of Acceptance of a Lease by a Successful Applicant signed by 

Andrew Maid 

(b) Department of Lands receipt no. 82787 of K50 from Andrew Maid 
for survey fees as per LG and LAF over Lot 12, Section 122, Hohola, 
NCD 



157 



(C) Department of Land receipt no. 82789 of K4,630 from 

Andrew Maid for land transaction from 20 January 2000 to 31 
December 2000 as per LG & LAF 

34. On 18 May 2000 the State through delegate of Minister for Lands granted a 
business (commercial) lease to Andrew Maid for - 

(a) 99 years commencing from 27 January 28 January 2000 to 27 January 

2099 

(b) Section 122, Lot 12, Hohola, NCD 

35. On 22 May 2000 Andrew Maid registered as proprietor of State Lease 
Volume 23, Folio 182 over Section 122, Lot 12, Hohola, NCD. 

36. On 8 August 2000 a Statement was issued by Guao K. Zurenuoc, OBE, 
Secretary for Lands that - 

(a) Section 122 Lot 12 is zoned for public institution/public purpose and 
not for commercial purpose 

(b) Andrew Maid's relocation from Lot 1, Sec 71 to Lot 12, Section 122 
was to enable him to sell off his stock and vacate 

(c) The Land Board Meeting recommending Andrew Maid as the 

successful applicant never convened, was illegal and therefore 
rendering Andrew Maid's State lease null and void 

(d) the Registrar of Titles strike out/cancel the title over Lot 12, Section 
122, Hohola (Gordon) registered as Volume 23 Folio 182 

37. On 10 August 2000, an entry was made by Registrar of Titles, Karo Lavi, in 
the register of Tides Journal No. S. 24356, cancelling State lease Volume 23 
Folio 182 under Section 161 of "Land Registration Act. 



158 



38. On 28 September 2000, a Notice of Determination of an Application for 

Planning Permission was issued - 

(a) To Lamana Development Ltd C/- AKT Associates 

(b) From Bernard Kipit, Chairman, NCD Physical Planning Board 

(c) For re-subdivision and Change of zone from public institutional and 
adjoining land as per content of Plan No. NCD-ZON-OI6 

39. On 27 December 2000 NCD Physical Planning Board wrote to Lamana 

Developments Ltd C/- AKT Associates Ltd - 

(a) Referring to Application for proposed re-subdivision and rezoning 
and erection of a motel/lodge complex at Section 122, Lot 12, 
Hohola and adjoining land, considered by NCD Physical Planning 
Board at its meeting no. 09/00 on 28 September 2000 

(b) Successfully granted planning permission over Section 122, Lot 12, 
Hohola and adjoining land 

40. On 28 December 2000 National Gazette No.G167 published ~ 

(a) Pages 3, 4 

(b) Notification of Zoning of Physical Planning Area 

(c) Re-subdivision and change of zone from public institutional to 
commercial, public utilities to commercial, and public institutional to 
public utilities 

(d) Dated 28 September 2000 at meeting no. 9/2000 of NCD Physical 
Planning Board 

(e) B. Kipit, Chairman 

(f) On 10 August 2000, an entry was made in the register of Titles 
Journal No. S. 24356 - cancelling State lease Volume 23 Folio 182 
under Section 161 oi band "Registration Act 



159 



2001 

41. By letter dated 17 April 2001, Raga Kavana, Registrar of Tides 

informed Andrew Maid of cancellation of Registration of Lease 
pursuant to s. 161 of Land Registration Act in respect of Lot 12, Section 
122, Hohola, NCD 

42. On 7 May 2001, Andrew Maid received Registrar of Titles' letter 

dated 17 April 2001. 

43. On 1 8 May 2001 , National Gazette No.G65 published - 

(a) Tender No. 336/2001 

(b) Business (Commercial) Motel and Hotel Lease 

(c) Lot 12, Section 122 (Gordon) Hohola 

44. On 13 July 2001, Peter Pena & Associates commenced OS No. 426 of 2001 for 

Andrew Maid against Ango Wangatau, Chairman PNG Lands Board; Guao 
Zurenuoc, Secretary for L&PP; Raga Kavana, Registrar of Tides; and the 
State. Andrew Maid sought the following relief: 

/. "The Defendants, together, and in particular the First Defendant, be restrained from 
having the property (Section 122 Allotment 12 Hohola, NCD) listed on the Land 
Boards list of matters for hearing or any hearing pursuant to public tender. 

2. The Defendants be restrained from conducting any further dealings in 
or relation to the Land in question. 

3. The injunction shall remain in force and effect until the substantive proceedings which 
the Plaintiff is in the process of instituting by way of 

the Writ of Summons against the Defendants is determined in facility. 

4. Costs of these proceedings. " 



160 



45. On 17 July 2001 Tender Application lodged by Lamana Lodge Ltd- 

(a) Advertisement No. 336/2001 

(b) Signed and dated 1 7 July 200 1 

46. On 17 July 2001 AKT Associates paid K100 to Department of Lands (receipt 
no. 105577) as application fee for business/commercial lease (Tender NO. 
336/2001) on behalf of Lamana Lodge Ltd 

47. On 26 July 2001, Peter Pena & Associates filed Orders of Kandakasi, J of 25 
July 2001 in the following terms - 

"/. The Defendants, together, and in particular the First Defendant is restrained from having 

the property (Section 122 Allotment 12 Hohola, NCD) listed on the Tand Boards list of 

matters for hearing or any hearing pursuant to public tender. 
"2. The Defendants are restrained from conducting any further dealings in or in 

relation to the Tand in question unless otherwise ordered. "3. The Interim injunction shall 
remain in force and effect until the substantive proceedings which the Plaintiff is in the process of 
instituting by way of the Writ of Summons against the Defendants is determined infinality. "4. 
"Costs of the proceedings. 
"5. "Parties shall be at liberty on 3 days notice to the other party to apply for variation lifting 

or otherwise of these orders. " 

48. By letter dated 19 September 2000 addressed to the Attorney General 

(Francis Damem) and copied to the Solicitor General, Peter Pena & 
Associates (Joel Alu) purported to give notice of Andrew Maid's intention to 
make a claim against the State in the following terms: "NOTICE OF 
INTENTION TO MAKE A CLAIM - ANDREWMALD - V- THE 
STATE 



161 



We refer to the above matter and advised that we have instructions to sue the State 

and the Department of hands for breach of Constitutional Rights and deprivation 

of ownership of property known as State hease Volume 23, Folio 182, Section 

122, hot 12, Hohola, NCD, which hand our client Mr. Andrew Maid was 

registeredproprietor, (State hease Holder). 

However the Minister for hands unlawfully cancelled his Title. 

We hereby give Notice pursuant to the Claims by and Against the State Act no. 

52 of 1996 of our client's Intention to sue" 

49. On 24 October 2001, Peter Pena & Associates filed WS No 1534 of 2001 for 
Andrew Maid against Ango Wangatau, Chairman PNG Lands Board; Guao 
Zurenuoc, Secretary for L&PP; Raga Kavana, Registrar of Titles; and the 
State. Andrew Maid sought the following relief: 

/. "Damages pursuant to section 58 of the Constitution for breach of basic 
constitutional rights; 

2. ¥5,901, 189.00 in damages for. 

(i) the land known as State hease Volume 23 Folio 182, Section 122, hot 12, 

Hohola; 
(ii) for loss of business andprofits; 
(Hi) loss of funds expanded on the hand including hand rents and renewal of 

licence. 

3. Interest 

4. Costs" 

50. On 1 November 2001, Maladinas Lawyers filed a Notice of Intention to 
Defend dated 31 October 2001 for DLPP. 

51. By letter dated 13 November 2001 to Peter Pena & Associates, John Kawi, 
Solicitor General rejected letter of 19 September 2001 as notice under 
Section 5 of the Claims Act because the letter was received on 



162 



52. 30 October 2001 together with WS No. 1534 of 2001 therefore 
originating process is rendered void requiring rectification 
immediately prior to taking any further steps in prosecuting Andrew 
Maid's claim. 

53. By letter dated 6 December 2001 to the Solicitor General, Peter Pena & 

Associates responded to Solicitor General letter of 13 November 2001- 

(a) asserting service of notice by letter dated 19 September 2001 was 
effected on Attorney General, copies of which were faxed to Attorney 
General and circulated to the Solicitor General via mail; 

(b) alternatively, was giving notice under Section 5 of the Claims Act by 
enclosing letter dated 19 September 2001 and sought Solicitor 
General's position on any issues on mode of service 

54. On 22 November 2001, Peter Pena & Associates filed an Amended Writ of 
Summons No. 1534 of 2001. Andrew Maid sought the following relief: 

(a) u damages pursuant to section 58 of the Constitution for breach of basic constitutional 
<ts; 

(b) K5,90 1, 189.00 in damages for: 
the land known as State Lease Volume 23 Folio 182, Section 122, Lot 

12, Hohola; 

for loss of business andprofits; 

loss of funds expanded on the Land including Land rents and renewal of 
licence. 

(c) In the alternative, the Title to the property known as State Lease Volume 23 Folio 

182. Section 122, Lot 12. Hohola. be re-instated to the Plaintiff together with loss of 

business and profits from the land aster the Plaintiffs claim in paragraph (b) 
163 



(d) Interest 

(e) Cost? 

2002 

55. On 21 May 2002 Peter Pena & Associates submitted a Without Prejudice 
Quantum Submission to the Solicitor General. 

56. On 21 August 2002, Justice Davani made Orders - 

(a) Joining Lamana Lodge Ltd as a party/ fifth defendant 

(b) Directed Mr Jeffrey Abone, Peter Pena & Associates to file affidavit 
attaching copy of letter giving notice under Section 5 of the Claims By 
«& Against the State Act 1996 ('Claims Act') 

(c) Adjourning the matter to 1 1 September 2002 

57. On 23 August 2002, Jeffrey Abone, Peter Pena & Associates filed an affidavit 
attaching letter dated 19 September 2001 (purporting to giving notice), 13 
November 2001 (rejecting purported notice) and 6 December 2001 (asserting 
initial notice given by fax, which was enclosed giving notice again), and 
deposed in his belief that the mandatory notice requirements were met by 
Andrew Maid. 

58. On 1 1 September 2002, Justice Kandakasi - 

(a) Did not determine the issue of mandatory notice under Section 5 of the 

Claims Act, despite Jeffrey Abone informing the Court about Justice 
Davani's the previous direction of 21 August 2002; 

(b) Adjourned the matter to 13 September 2002 for parties to: 

"have a discussion and find out where the clients' position are and what happened. 
Then ifjou are not able to settle jou will come back.. You use today and tomorrow to 
go into discussions and conference mode and find 



164 



out where jour rights and positions are. If you are not able to reach 
some final agreement on that then you come back to court and tell 
me why you are not able to. I will give a hearing on that basis. 
Rather than talking about default judgment and all of that I would 
rather deal with the substantive matter that way. " 

59. On 13 September 2002, Justice Kandakasi directed Jeffrey Abone, Peter Pena 
& Associates to take out appropriate draft for his Honour endorsement in 
the following terms: 

"I will decline to make any derision on the application for default judgment, instead 
direct that the State and the plaintiff and the defendant, that is the State seriously 
negotiate towards the indicated possible solution of return of the title to the plaintiff and 
included then in that amount should be appropriate amount of damages if any that 
was caused by tbe State's cancellation of the plaintiffs title. And that that has to be 
quantified and has to be agreed upon, if not comes back to court for assessment on 



60. On 19 September 2002, Peter Pena & Associates filed Orders of Kandakasi, J 
of 13 September 2002 in the following terms - 

"/. The Plaintiff and the First, Second, Third and Fourth Defendants are directed to forthwith 
resolve this matter with the Plaintiff in terms of 

(a) Reinstate the Title of the property described as "Volume 23 Folio 182. 

Section 1 22Hohola " to the Plaintiff. 

(b) Settle and pay to the Plaintiff damages incurred and suffered as a result of the 

decision to unlawfully terminate the Plaintiffs title to the subjectproperty; 
"2. The Fifth Defendant shall not interfere with the settlement process in Order 1 above. 



165 



"3. The Plaintiff be at liberty to negotiate the sale of the subject properly with the 

Fifth Defendant on commercial terms. 
"4. Costs is awarded to the Plaintiff 

61. On 25 September 2002, Registrar of Titles, Raga Kavana, made an entry of 
cancellation of "Journal No. S.24356pursuant to National Court Order WS 1534 
of2001 -JournalNo.S.29723". 

62. On 1 1 October 2002, Deed of Release was executed between Andrew Maid 
and State through Solicitor General, Zacchary Gelu for the State "without any 
admission of liability in the following terms: 

'The State parties and MAUD agree that actions constituted in W.S. 1534 of 2001 and 
O.S. No. 426 of200 1 be settled in terms as ordered by the National Court and in particular. 

(a) The title of the land known as Section 122, Allotment 12, Volume 23, Folio 182, 
Hohola, National Capital District be reinstated to MATD by the State. 

(b) Damages in the total sum of K4,000,000.00 be paid to MATD as full 
andfinalpayment. 

(c) MATD V costs be limited to K1 00,000.00 only. 

(d) Statutoy Interest only be paid by the State on any outstanding amount. " 

2005 

63. On 15 December 2005, Andrew Maid transferred State Lease Volume 23 
Folio 182 over Section 122, Lot 12, Hohola, NCD to Progress Auto 
Machinery Ltd. 

64. On 15 December 2005, State Lease Volume 23 Folio 182 over Section 122, 
Lot 12, Hohola, NCD was mortgaged to Westpac Bank PNG Ltd. 



166 



FINDINGS I. Liability 
In Issue 

(a) Non-compliance with Section 5 of Claims By and Against 

the State Act 1996 ('Claims Act') 

Andrew Maid became aware on 7 May 2001 that his tide had been cancelled by the 
Registrar of Tides on 10 August 2000. Thus, his cause of action accrued on 7 May 

2001 requiring him to give notice of his intention to make a claim against the State 
no later than 7 November 2001. 

Andrew Maid and Peter Pena & Associates asserted that the letter dated 19 
September 2001 addressed to the Attorney General and copied to the Solicitor 
General ("Notice of claim"), complied with Section 5 of the Claims Act. 

(b) Inappropriate person given notice 

The requirement to give notice to the appropriate person and the method of serving 
the notice are mandatory: Bokin v The Independent State of Papua New Guinea (2001) 
N2111,DamniJ. 

The former Attorney General, Francis Dam em, could not "specifically recall" 
receiving the Notice of claim. The Solicitor General file contained the Notice of 
claim but there was no notation or mark to indicate service on the former Attorney 
General. The Affidavit of Service by Jeffrey Abone sworn and filed on 23 August 

2002 in WS No. 1534 of 2001 merely deposed to his belief that service of the Notice 
of claim was effected on the Attorney General by the previous lawyer in carriage of 
the matter, Mr Joel Alu. 



167 



In any event, the Attorney General is not the appropriate person to whom 
such notice is required to be given. In this regard, the Notice of claim was 
defective for being served on the Office of the Attorney General. 

(c) Notice not served before filing of originating process 

It is settled law that a notice of an intention to make a claim is a condition 

precedent to issuing a writ of summons. Notice under Section 5 must be 

given first - before the writ is issued - even if the writ is issued within 6 

months after the date of the occurrence out of which the claim arises: Tohian 
and the State v Tau Uu (1998) SC566, Supreme Court, KapiDCJ, Sheehan],]alina 
P 

The Solicitor General was one of two (2) appropriate persons authorized to 
receive the Notice of claim but it was still defective. The Notice of claim 
was received by the Solicitor General on 30 October 2001 together with the 
originating process, WS No. 1534 of 2001. The Notice of claim was invalid 
in this regard. 

(d) Insufficient details 

The notice must give sufficient details of the intended claim, e.g. date, time 
and place of occurrence. If insufficient details are given, even a notice in 
writing will not comply with Section 5: Hewali v Police Force and The State 
(2002) N2233, National Court, KandakasiJ. 

No date of cancellation was mentioned in the Notice of claim to determine 
when Andrew Maid's cause of action arose. To that extent, the Notice of 
claim was defective as well. 

Andrew Maid's position is further compounded by no letter "accepting" the 
Notice of claim as notice under Section 5 of the Claims Act. 



168 



(e) No merits in claim 

11. There were significant issues of fact and law not disclosed to the National Court that 
substantially affected the assertions and relief sought in O.S. No. 426 of 2001 and WS 
No. 1534 of 2001. 

12. Raga Kavana, Registrar of Titles - para 4 wrongly pleaded Land Registration Act, 
1981 (should be Ch. 191) 

(f) Invalid grant of lease 

13. The grant of the State Lease over Lot 12, Section 122, Hohola, NCD was invalid ab 
initio (from the beginning) on four (4) grounds. 

14. Firstly, there was no application made by Andrew Maid to exempt Lot 12, Section 
122, Hohola (Gordon), NCD from advertisement or public tender. Andrew Maid's 
application for exemption from advertisement was in respect of Lots 6, 7, and 10, 
Section 122, Hohola (Gordon), NCD. The exemption by the Minister for Lands on 
15 November 1999 in respect of Lot 12, Section 122, Hohola (Gordon), NCD was 
therefore invalid. 

15. Secondly, the purported PNG Land Board Meeting No. 2017 in which Andrew Maid 
was recommended as the successful applicant in respect of Lot 12, Section 122, 
Hohola, NCD under item 25 was illegal. This was revealed by the Acting Director, 
Land Administration Division, DLPP (Daniel Katakumb) in response to Summons 
No. 344 in the following terms: 

"PNG Land Board of Meeting 20 1 7 

• It was never convened a Meeting and there was no indication of day, time, location 
relating to the sitting and deliberation and decisions of the PNG Land Board 
Meeting Minutes. 



169 



• The Land Board Meeting Minutes were never been prepared by Officers of Land 
Administration. 

• The Property Files were not thoroughly check listed for PNG Land Board 
consideration. 

• No checklist were provided by the Land Allocation Officer of each Region. 

• It was a self centred Board by the then late Chairman, Mr Ralph Guise" 

Thirdly, the purported National Gazette No. G9 dated 28 January 2000 
recommending Andrew Maid as the successful applicant of a Business (Commercial) 
Lease over Allotment 12, Section 122, Hohola, City of Port Moresby, NCD was 
merely typeset or draft for publication. This is shown in relevant excerpts of the 
transcript of 16 April 2009 containing the Government Printer, Ken Kaiah's, answers 
to questions raised by the Commission, which are reproduced hereunder: 

[At pages 3041 - 3042] 

'MR GERORO: Yes, thank you Mr Kaiah. MrKaiah, I refer you to paragraph 2 of your 
statement, particularly subparagraph (a)(ii) of the 21 st page where you say, 
"Sir, on Gazette No G9,you will note that there is no record of section 
122 and allotment 12 published", and you referred us to exhibit 1. 
Exhibit 1 is ga^ettal notice No G9 Port Moresby Thursday 3 February 
2000. So you basically stated that there is no reference to a ga^ettal of a 
property described as section 122 and allotment 12. 

THE CHAIRMAN: Was there any Land Board meetings, is it? 

MR GERORO: That is in relation to — 

THE CHAIRMAN: G9 2000, 12 February does not recall any land Board matters at all, 
is that correct? 

MR GERORO: Is that is correct? 



170 



A: That is correct. 

j2; Mr Kaiah, if I can refer you to a document which I showed to you. It appears to be a 
ga^ettal notice, No G9, Tort Moresby, Friday 28 January 2000. It is two pages, dated 
25 January 2000 and it is signed by R Guise, Chairman, PNG Land Board. The G9 
is dated 28 January 2000. In this particular document, it is relation to a Tand Hoard 
meeting, No 2017. There are a number of items there and I will referyou particularly to 
page No 2 which relates to item number 25. It says there, at page 2, 
TFDC/ ' 1 22 / 01 2A.ndrew Maid, a business commercial lease over Allotment 12, 
Section 122, Hobo la, City of Port Moresby, National Capital District. You will note on 
thefirstpage it says, that the Tand Board meeting, in respect of all those items, listing the 
successful applicants for State leases and particulars of the land lease of which Mr Maid is 
gazetted as having being a successful applicant. If you can comment on this particular 
document that I havejust shown you? 

A: Thank you, Sir, with this particular ga^ettal notice G9,1 believe it was in a draft stage 
when the copy probably must have given out to client or whoever. But there were 
correspondence that we received from Tands Department saying that there was a letter that 
we received on 4 February 2000 saying that there was no meeting held and therefore, this 
instrument to be withdrawn. So it was erasedfrom the actual gazette 9 therefore the final 
gazette G9 that was published on 3 February is the correct one; it is the correct gazette. 

Q: Sorry, Chief Commissioner for the record the document that I have shown to Mr Kaiah, 
that is the ga^ettal — it was only a draft copy of the ga^ettal dated 28 January 2000, 
No G9 was produced by Mr Maid in a statement in response to a summons. So that is 
how we obtained this document, and have summonsed Mr Kaiah to comment on these 
documents. So Mr Kaiah, this is merely a draft copy? 

A: A draft copy. 

Q: For all purposes it was never gazetted orpublished to the National Gazette? 



171 



A: No. 

MR GERORO: You confirm that? 

A: 



17. Fourth, the Chairman, Ralph Guise (dec'd) was not the Secretary for Lands & 
Physical Planning and therefore the purported gazettal notice G9 dated 28 January 
2000 publishing the successful grant of leases, including Andrew Maid's grant, is null 
and void: Section 74 of the Land Act 1996. 

18. Whilst Peter Pena generally assisted the Commission with evidence, he was quite 
evasive in giving a fall and frank disclosure of his knowledge and issues concerning 
the purported grant of the lease to Andrew Maid in the illegal Land Board Meeting 
No. 2017. 

(g) Lack of pleading in Statement & Amended Statement of Claim 

19. The pleadings filed in WS No. 1534 of 2001 by Peter Pena & Associates for Andrew 
Maid do not sufficiently plead the alleged breaches committed by the State parties. 
There are no specific references to the relevant clauses of the lease or the provisions 
of any legislation alleged to have been breached. The only reference made is to 
Section 58 of the Constitution based on an alleged breach of Andrew Maid's 
proprietary rights. The legal basis of the proprietary rights asserted is not disclosed. In 
the ordinary course, Andrew Maid would not have been at liberty to lead evidence 
and claim damages for want of particulars had the State objected to these anomalies. 

II. Assessment of damages 

20. As the matter was setded out of Court, the Court did not make findings on the 
amount of damages to award Andrew Maid. 



172 



21. There is no record in the Solicitor General file indicating the bases for approving and 
settling Andrew Maid's damages at K4,000,000 plus cost of Id00,000 as stated in the 
Deed of Release dated 11 October 2002. Further, the reinstatement of tide to 
Andrew Maid could not possibly have entitled him to damages of K4 million. At 
best, Andrew Maid would only be entided to any damages incurred as a result of the 
cancellation of the title up to the point of return of the title. 

22. Peter Pena & Associates lodged with the Solicitor General on behalf of Andrew Maid 
a Without Quantum Prejudice Submission dated 21 May 2002. A summary extract of 
the Quantum Submission by main headings is outlined below: 





Damages 


Assessmen 
t(K) 


Supporting Document 


a) 


Damages for breach of Constitutional 
Rights (Sect. 58) 


1,500,000 


Quote of Constitution- Section 58 


b) 


Damages for loss of land and 
improvements 


1,346,500 


Valuation from Tack Realty 
(Unknown to IP A) 


c) 


Damages for loss of business and 
profits 


5,901,189 


Cashflow from Ram Business 
Consultants 


d) 


Loss of funds expended to secure and 
hold title 


27,280 


License fees, land rental fees and 
Architectural fees 


e) 


Costs 


57,240 


Legal fees, Accountant fees & 
Valuation fees 


*) 


Interest 







g) 


Aggravated Damages 


200,000 


Quote of Common Law 


h) 


Exemplary Damages 


200,000 


Quote of Common Law 




Total 


9,232,209 





173 



23. The quantum submission was attached with relevant supporting attachments 
including alleged breaches related to the Constitution. Some of the monetary damages 
assessed were quite excessive. Also the quantum submission included damages for 
loss of land and improvements only (b) and yet the said land was re -instated. 

24. The Cash-flow projection prepared by Ram Business Consultants which was part of 
the Quantum Submission had serious flaws. The following are worth noting; 

(a) The cash-flow is flawed and unacceptable to be regarded as an accurate 
Cash flow especially in terms of operating a supermarket in a city 
environment. The following relevant costs associate with operating a 
supermarket were not factored into the cash flow - 
(i) Cost of goods sold (COGS) 
(ii) Staff remuneration 
(iii) Costs of utilities 
(iv) Security costs 
(v) Capital expenditure 

25. The above list is not exhaustive but to show that the cash flow projection prepared 
by Ram Business Consultants completely ignored obvious /relevant costs associated 
with such investment. 

26. The cash-flow did not consider the loss for year 1, especially during construction 
period where most start-up business at inception would incur loss. The cash-flow 
projection prepared by Ram Business Consultants projected a net profit after tax of 
K1.12 million in year one. There are no 

I compelling factors to believe that such a projection was realistic as many relevant costs 
were not factored into this projection. 



174 



There is no basis on the revenue of K2.0miilion projected in year one and thereafter 
increased by 7.5%. 

The Net Present Value (NPV) calculated using 12% with 10 years' income was 
K5, 901, 189. This figure is completely inaccurate when compared to our calculation 
based on the same assumption Ram Business Consultants used. According to our 
calculation, the NPV is KL241.539. Ram Business Consultants deliberately inflated 
the NPV by K4,659,650 for reasons known only to themselves. Further, we do not 
understand the basis of using a 10 year period in the NPV calculation. 

A non-cash item in respect of depreciation of K300,000 was also added back to the 
cash flow to inflate the profit by IC300,000. 

There is also the issue whether the bank would loan them the K3 million as there 
was no evidence to show that the bank would have approved the K3 million loan 
stated in the cash-flow. Further, Andrew Maid and his company, Piu Mauwin 
Trading, did not own any tangible assets which would be mortgaged to obtain that 
significant loan. In commercial terms, no bank or financial institution would have 
loaned such an amount without any known security to cover the loan in case of 
default. 

The interest rate of 22% on a loan of K3 million does not have any basis. There is no 
correspondence from the lender or a general rate prevailing at the time from any 
commercial lender to support this rate. 

From the review of the cash flow projection prepared by Ram Business Consultants 
we conclude that the Cash-flow projection was specifically engineered in a way to 
inflate the yearly income projection including NPV so that damages claim would be 
high. The Ram Consultants Report was based on mere trading assumptions supplied 
by Andrew Maid, not on proper business records and tax returns. 



175 



33. As to the costs of Kl 00,000.00, this amount was not submitted in the Quantum 

Submissions nor was there a bill of costs in taxable form submitted to the Solicitor 
General. 

III. Steps taken (or not taken) by Solicitor General in defence of the claim 

34. Clearly, there is ample evidence of serious failures on the part of the Solicitor- 
General, Zacchary Gelu, in the performance of his professional duties as lawyer for 
the State because: 

(a) there was no liability on the part of the State or the Secretary, Department 

of Lands & Physical Planning, as we have found above; and 

(b) there was no actual or proper assessment of damages, if any, to justify 

K4.1 million as the settlement figure. 

35. Zacchary Gelu breached his duty of care to his clients (Secretary for Lands & Physical 
Planning and the State) as a lawyer. He failed to perform (or properly perform) due 
diligence as to the claim by Andrew Maid by not seeking instructions from the 
Secretary, Department of Lands & Physical Planning when the purported Notice of 
claim was initially given, and then again upon service of the originating process until 
execution of the Deed of Settlement dated 11 October 2002. 

36. As a result, Zacchary Gelu failed to take all steps necessary to defend the State and 
the Secretary, Department of Lands & Physical Planning by NOT :- 

(a) seeking any instructions from- 
(i) Secretary, DLPP; 
(ii) Registrar of Titles; 
(iii) Attorney General; 

176 



(iv) Government Printer; 

(b) conducting any due diligence, including searches or making relevant 
inquiries with the above offices; 

(c) filing a notice of intention to defend; 

(d) filing a defence for the State parties on the following merits: 

(i) Lack of mandatory notice under Section 5 of the Claims Act; 
(ii) The State Lease issued to Andrew Mr Maid was properly cancelled 
because- 

O Hon. Mr Maid was never recommended by the PNG ■ 
Land Board as the successful applicant for a State Lease 
because PNG Land Board Meeting No. 2017 was not properly 
convened and, therefore, illegal o PNG Land Board Minutes 
recommending Hon. Mr Maid as the successful application for 
a State Lease was done fraudulendy o Hon. Mr Maid was 
never gazetted as the successful applicant for a State Lease 

(e) filing an appropriate application to dismiss the entire claim for non- 
compliance with Section 5 of the Claims Act 

(f) providing any advice to the State parties on the veracity of Andrew 
Maid's claim and any recommendations on the way forward to defend 
the claim 

(g) seeking any independent advice on the professional reports and material 
relied upon by Andrew Maid in support of his claim 

In respect of the execution of the Deed of Settlement dated 11 October 2002, the 
Commission notes that there was lack of compliance with: 

(a) Section 61 of the Public Finances (Management) Act 1995- contracts 
involving the payment of an amount exceeding 



111 



Kl 00,000 require the approval of the Minister for Finance. No 
approval was sought nor obtained from the Minister for Finance 
through the Secretary for Finance prior to the signing of the 
Deed by Zacchary Gelu. 

(b) NEC Decision NG07 22 August 2002, Clause 10 - The 
National executive Council at its meeting on 22 August 2002 
(some 2 months prior to signing of the Deed of Settlement) - 
"directed that there be no more out of court settlements by any State body or 
authority, including by the Attorney-General and Solicitor-General, without 
the approval of the NEC, acting on advice ofCACC. " 

IV. Processing of claim and Pay-out 

38. Our review of the payment vouchers maintained at the Dept. of Finance in 

relation to the case shows that an amount totalling K5, 193,538 was paid 
out between 2003 and July of 2004. There were 16 cheque payments paid 
out over that period. The following were worth noting in respect of the 
payouts: 





Date 


Code 


Cheque No. 


Amount (K) 


Details 


DOR Unsigned 


1 


25/1/2003 


207-4201-4123-135 


710210 


190,000 


Part Pay.- deed of release 
debt 


Cheque copy only on 
file 


2 


17/2/2003 


207-4201-2107-135 


712248 


100,000 


Pymt for O/S Deed of 
Release Debt (P/P) 


DOR has no 
signature of AG 


3 


20/3/2003 


207-4201-4123-135 


715407 


100,000 


Pmt for o/s DOR claim 


Cheque copy only on 
file 


4 


4/4/2003 


20742012107135 


716806 


300,000 


Payment 
O/Standing Debts 


Cheque copy only on 
file 


5 


20/10/2003 


460- 31 


736989 


500,000 


Pmt of o/s court order WS 
1534 of 2001 


DOR has no 
signature of AG 


6 


31/10/2003 


460-31 


738376 


500,000 


Loss & Damages to 
Properties O.S No. 426 


DOR has no 
signature of AG 



178 



7 


17/11/2003 


207-4201-4123-135 


739737 


200,000 


Pmt for o/s DOR claim 


Cheque copy only 
on file 


8 


29/12/2003 


460- 31 


744562 


1,000,000 


Pmt o/s court order (part 
payment) 


DOR has no 
signature of AG 


9 


18/3/2004 


207-4201-2107-135 


772571 


250,000 


O/S DOR Claim O.S No. 
426 of 2001 


DOR has no 
signature of AG 


10 


5/5/2004 


207-4201-2107-135 


777565 


560,000 


Pmt o/ s c/order OS#426 
2004 


Cheque copy only 
on file 


11 


24/5/2004 


460-131 


779266 


200,000 


Pmt for o/s DOR claim 


Cheque copy only 
on file 


12 


21/6/2004 


207-4201-2107-135 


781989 


200,000 


Pmt for o/s DOR claim 


DOR has no 
signature of AG 


13 


13/7/2004 


460- 31 


784063 


200,000 


Pmt for o/s DOR claim 
(legal fees) 


Cheque copy only 
on file 


14 


10/3/2005 


207-4201-2107-135 


804833 


400,000 


Pmt for o/s claim for 
interest 


Cheque copy only 
on file 


IS 


7/6/2005 


207-4201-2107-135 


812767 


293,538 


Pmt for o/s interest 


Based on Parkil 
Lawyers 
submission. 
Cheque copy only 
on file 


16 


30/6/2005 


207-4201-2107-135 


814547 


200,000 


Payment of O/S Court 
Order 


Based on Parkil 
Lawyers 
submission. 
Cheque copy only 
on file 






5,193,538 




Damages agreed per E 


OR 




4,100,000 


Included costs oi 
K100.000 




Interest calculated at 8 


A 




893,538 


Interests for 2yrs,8mths & 
21 days 


Based on Parkil 

Lawyers submission 


Total to be payable 


4,993,538 






Over payment 






200,000 


Unexplained over 
payment 





39. Some payment vouchers had copies of the DOR that did not have the SG 



signature (unsigned by Zacchary Gelu) while some were missing. Despite 

179 



the anomalies noted in terms of attaching incomplete documentation especially in 
regards to unsigned DOR, payments were approved and processed by staff at 
Finance Department who were tasked with financial authority, to ensure appropriate 
documentations were included prior to processing of claims 

40. Payments made to Andrew Maid was over paid by K200,000, (cheque no. 784063 
dated 13 July 2004). This amount has to be recovered by the State from Andrew 
Maid. 

41. Payments were collected by Andrew Maid at the Department of Finance direcdy 
rather then through the SG office. 

42. The Finance Department processed cheque payments for the damages direct to 
Andrew Maid in his name rather than in his lawyer's name (trust account). 

43. Parkil Lawyers who acted for Andrew Maid demanded the Attorney General 
(Francis Damem) by letter dated 5 August 2004 for interest to be paid together with 
their calculation for an amount of K893,537.87. 

44. The Attorney General then wrote a cover letter dated 5 January 2005 instructing the 
Finance Secretary to pay. He also stated in that letter that the calculation was in 
order and sanctioned for payment despite improper calculation of interest. 

45. Some of the payments made were through the Vote 460-31 (Suspense Account #2). 
Funds in Suspense Account #2 are not considered as legally available funds for the 
purpose of Court setdements. Hence payments made out of the suspense accounts 
are deemed unlawful or illegal. 



180 



46. Interest totalling K893,538.00 was paid based on the submission made in 2004 by 
Parkil Lawyers and supported by the Attorney General and subsequendy paid by the 
Department of Finance in 2005. 

47. Based on the Commission's re-calculation of interest there was a miscalculation by 
Parkil Lawyers. Interest was over paid by K520,571.29. No independent verification 
was carried out by the Solicitor General, Attorney General or by internal auditor at 
Finance Department to verify the calculation before processing the interest 
component. 

48. When Andrew Maid collected the cheques, which were made under his name 
direcdy from the Department of Finance, there were several correspondences from 
his lawyer (Peter Pena & Associates) complaining to the Finance Department 
regarding the method of payments. 

49. The correspondence were either addressed to the Secretary of Finance and copied to 
the Solicitor General or Attorney General or vice versa, and related to an agreement 
that the lawyer had with his client about the amount of legal fees including standard 
procedures of settling court proceedings by Finance Department. The State was not 
privy to this agreement. 

50. Peter Pena & Associates letters asserted having an interest in the total sum of the 
claim, totalling Kl.l million as legal fees. There was another letter written to Andrew 
Maid reminding him of the fee arrangement that they had in place, the pertinent part 
of which are quoted in respect of apparent improper dealings from both Peter Pena 
& Associates and Andrew Maid to obtain the settlement: 

"Is there any wrong about the may we went in and negotiated (through makingfurther written 
submission) and increased the damages by K1.1 million (even though you were prepared to 
accept ¥3 million)" 



181 



"We are aware of the arrangement you have with certain officers of the 
Department of Finance to access payment cheques directly. We think it is highly 
improper and have advisedyou so in writing. We place you on notice that should 
you do anything to interfere inpayment of our fees, we will not hesitate to report 
your dealings directly to appropriate authoritiesfor investigations and action". 

51. Andrew Maid and his lawyers engaged in unprofessional conduct in the 
pursuit of the claim and its payment. Peter Pena & Associates claim for 
Kl.l million in legal fees is baseless in so far as the State is concerned as 
their costs were expressly limited to Kl 00,000.00. 

52. Because of the issues surrounding his legal fees, Andrew Maid wrote a 
letter to Peter Pena & Associates (copies to Attorney General and Finance 
Secretary) dated 15 April 2003 terminating their services. By then he was 
receiving parts of the setdement proceeds. An excerpt of the letter Andrew 
Maid wrote which is worth noting: 

For you to claim a percentage of any reward relying on some verbal agreement 
which I cannot recall further, has not been evidenced in writing and which appear 
to be unreasonably excessive is simply not accepted. A.sfar as I recall the Deed of 
Settlement sufficiently catered for your costs at K100,000for a matter which did 
not go to court. In fact, a substantial portion of the work leading to settlement was 
done by my own contacts, with your knowledge and consent'. 

G. RECOMMENDATIONS 

From the evidence received by the Commission, the recommendations are 
as follow: 

Referral to the Attorney General 

1 . Immediate commencement of an action against Hon. Andrew Maid, MP 
to: 



182 



a. challenge the legality of the Deed on the following grounds: 

i. Lack of mandatory notice under Section 5 of the Claims Act; 

ii. Hon. Mr Maid was never recommended by the PNG Land Board 
as the successful applicant for a State Lease because PNG Land 
Board Meeting No. 2017 was not properly convened and, 
therefore, illegal 

iii. PNG Land Board Minutes recommending Hon. Mr Maid as the 
successful application for a State Lease was done fraudulently Hon. 
Mr Maid was never gazetted as the 
» successful applicant for a State Lease 

iv. lack oj Ministerial approval prior to executing the Deed under Section 61 of 
the Public Finance (Management) Act 1995, and by reason of the Supreme 
Court decision in Fly River Provincial Government v Pioneer Health Services 
(2003) SC705 and followed in NCD Commission v Yama Security Services 
Ud (2005) SC835 

b. recover the sum of K5,l 93,538 

2. Immediate commencement of an action against Peter Pena & Associates to recover 
thesumofK200,000 

Referral to the Public Prosecutor 

3. Immediate commencement of an action against Hon. Mr Maid to recover the sum 
of K5,l 93,538 under the Proceeds of Crime Act 2005 

4. Immediate commencement of an action against Peter Pena & Associates to recover 
the sum of K200,000 under the Proceeds of Crime Act 2005 

Referrals to the Lawyers Statutory Committee 



183 



5. Zacchary Gelu for dishonourable, improper and unprofessional behaviour 

6. Francis Damem for dishonourable, improper and unprofessional behaviour 

7. Peter Pena of Peter Pena & Associates for dishonourable, improper and 
unprofessional behaviour 

8. Jeffrey Abone of Parkil Lawyers for dishonourable, improper and unprofessional 
behaviour 

Referrals to the Royal PNG Constabulary 

9. Zacchary Gelu for settling Hon. Mr Maid's unlawful claim 

10. Francis Damem for clearing overpayment of K520,571.29 in interest 

1 1 . Hon. Mr Maid for making and benefiting from his unlawful claim 

12. Peter Pena of Peter Pena & Associates for assisting Hon. Mr Maid pursue his 
unlawful claim and the monies they gained from that claim 

13. Jeffrey Abone of Parkil Lawyers for assisting Hon. Mr Maid pursue his unlawful claim 
and the monies they gained from that claim 

Referrals to the Prime Minister 

14. Appoint a Commission of Inquiry into the Department of Lands & Physical Planning 

15. Appoint a Commission of Inquiry into the Office of Solicitor General 

Consequential legislative or other reform 

1 6 . Attorney General's Act1 989 and Claims By <<& Against the State Act be amended to the following 



184 



a. the Solicitor General must be a lawyer of high standing and at least with 10 
years litigation experience 

b. the Solicitor General to be appointed by Judicial Legal Services Commission 

c. the Solicitor General shall act on the written instructions of the State 
departments, agencies or instrumentalities concerned, unless in urgent cases 
where oral instructions would suffice provided written instructions are 
subsequently given within a reasonable time to retrospectively confirm the 
verbal instructions previously given 

d. the Attorney General granted with the exclusive power to settie cases out of 
court with prior approval from the all State departments, agencies or 
instrumentalities concerned and National Executive Council 

e. the Attorney General shall execute all deeds for setdement on behalf of the 
State and the Solicitor General shall witness his signature, failing which the 
deed is unenforceable 

f. all settlements involving the State, including Provincial Governments, 
departments, agencies or instrumentalities, has no effect unless 
sanctioned/ approved by the National Court 

g. Any proposed settlement of costs concerning the State or costs awarded 
against the State must involve production of an itemized bill of costs in taxable 
form for consideration by the Solicitor General and Attorney General for 
settlement, and if not agreed upon, should be taxed in the normal way under 
the National Court Rules. 

Financial Instructions made under the Public Finance (Management) Act 1995 be amended 

to the following effect: 

a. Finance Form 3 be revised to cover, where necessary, withholding of tax 

assessed for remittance to IRC in respect of all claims submitted for 

payment 



185 



b. Finance should be prohibited from raising and settling any judgment orders 
or lawyers bill of costs, without written clearance solely from the Office 
of the Attorney General 

Claims By <& Against the State Act 1996 be amended to the following 
effect: 

a. Notice of intention to make a claim against the State under Section 5 to 
be given to the extent damages is sought; 

b. Section 5 notice to be given to all State agents named as defendants 

c. Section 5 notice to be given to IRC to assess arrears in tax payable, if any 

d. Originating process (including statement of claim or in support) to be 
served on all the State agents named as defendants before any hearing 

e. All deeds of settlement to be drawn and executed on prescribed form 

luindAct 1996, related legislation and instruments be amended to the 
following effect: 

a. Exemption of any State land from advertisement for application or public 
tender shall be determined by a Land Exemption Committee consisting 
of the Minister, Secretary, DLPP and State Solicitor who must all agree; 

b. Register of all leases, licenses and interests granted by the State to be 
created, kept and maintained by an officer appointed by the Secretary, 
which shall detail: 

i. The name of the proprietor and date of acquisition; 
ii. Nature of interest/ type of lease/license; 
iii. Zoning status of parcel of land; 



186 



iv. Status of covenants and caveats registered, if any. c. PNG Land 
Board shall consult Register of all leases, licenses and interests granted by the 
State before considering application for a particular State lease 

Public Services (Management) Act 1995, related legislation and instruments be 
amended to the following effect: 

a. Prescribe "serious disciplinary offence" is committed where: 
L State line agency named as defendant fails to provide full 

and proper instructions to SG ii. State suffers loss as a result of 
negligence or failure to exercise due care in performance of duties 

b. On a finding of "serious disciplinary offence" - 
i. Ground for termination 

ii. Ineligible for appointment to any public office 



187 



B. Police 

The Commission has opened investigation on forty five (45) matters, which are said to have 
arisen from Police raids. Fifteen (15) of these are reported. All disclose a similar pattern. These 
claims alleging unlawful actions by police have led almost to an industry in itself. Claims for 
compensation for assault, damage to a loss of property and crops have resulted in many 
judgments against the State for many millions of Kina. The Department of Justice and 
Attorney General has advised that claims based on Police raids account for some 40 % of all 
claims against the State. 

All claims investigated by the Commission arose from raids which are alleged to have 
occurred in the Highlands region. Of these, the Commission has found that many of the 
matters were fabrications. 

In most cases, the Commission finds the Solicitor General failed to effectively seek 
instructions from the police. In at least three (3) matters, instructions were provided by Police 
but deliberately ignored. 

Like most State agencies examined, the Police do not have a systematic process by which 
records are created, maintained, reviewed and stored in an accessible manner. 
In the course of conduct of hearings in Mt Hagen, the Commission visited the Solicitor 
General's Highlands Regional Office and found that ninety (90) per cent of all claims against 
the State handled by that office arose from alleged Police impropriety. The office had in 
excess of 3,000 files emanating from the five (5) Highlands provinces, all handled by three (3) 
lawyers,, two (2) of whom are recent 



graduates to cover all the National and District Courts in the Highlands region. 
These gross inadequacies were exacerbated by the lack of logistical support. 

The Highlands Divisional Commander called for improved consultation and greater co- 
ordination between the Police stationed throughout the country and the Solicitor General in 
this area. 

The Commission recommends that there be greater co-ordination between the Police 
Commissioner and Director, Police Legal Services with the Attorney General and and 
Solicitor General so as to better defend die interests of the State. 

Because these claims have not been defended the extent of responsibility 7 of Police in them, 
has not been tested. 

However the basis of these claims which have progressed to settlement are all allegations of 
gross breaches of constitutional rights of the People by unlawful Police action. This signals an 
urgent need for inquiry, not simply to stop compensation claims but more importantly to 
protect the constitutional rights of the People, as well as to ensure the integrity of the Police 
and their operations. 

Accordingly the Commission recommends a Commission of Inquiry be held into the conduct 
of the Police and their use of 'raids' on communities in pursuit of criminal investigations. 



189 



(a) UmbaY Gabriel 



(\ 



An ait of mystery surrounds this Police raid based claim. To this day, the Commission 
of Inquiry (Col) has not seen or heard from Umba Y Gabriel, even after summonses 
and letters were sent through his lawyers and Notices were extensively published in 
the Newspapers. Sworn evidence was given of a huge sum of money being lugged into 
a hotel room in the dead of night, for counting and distribution. In a case already full 
of intrigue, the biggest bombshell was dropped on 31 st May 2009 when Mr. Gabriel 
Yer 1 supported by senior officials of the Department of Finance, gave sworn 
(affidavit) evidence that the full amount of K1.6 million had been returned to the 
Department of Finance (henceforth "DoF") on the 19 th February 2008 2 . This 
information was used by lawyer, Mr. Dick Korowa Kipoi in his application to have the 
Col cease investigations into the matter of Umba Y Gabriel. By a strange and twisted 
logic, he argued that the money had since been returned to DoF; therefore, no 
payment had originally been made so as to bring the matter within the Terms of 
Reference (henceforth "TOR") of the Col. 



As will be seen in the brief, this matter has all the hallmarks of a scam claim 
created and facilitated by a triad of people in- the highest offices of the PNG 
bureaucracy. It was initiated by a serving Deputy secretary for DoF (current 
Secretary, Mr. Gabriel Yer) as principal plaintiff. Although no section 5 
Notice was given, the claim was settled in record time by a willing Solicitor 
General (Mr. Zachary Gelu) and an even more obliging Secretary for Justice 
Department (Mr. Francis Damem). 



* Refer to Annexure "E" in Affidavit of Gabriel Yer sworn on 31/05/09 

* This happened shortly after the matter was listed in the newspapers as one of interest to the Col. 

190 



A cheque for Kl ,649,1 30 in the name of Umba Y Gabriel was made payable firsdy to 
Paul Paraka Lawyers and then to Harvey Nii Lawyers Trust Account after the first 
cheque was cancelled. The amount was paid out to honour a Deed of Setdement 
signed on the 1 5 th February 2003 between Mr. Zachary Gelu as Solicitor General and 
Mr. Paul Paraka who signed on behalf of Umba Y. Gabriel for reasons which have 
not been explained to date. The Deed of Setdement was signed scarcely a month after 
the claim was purportedly filed in the National Court on the 07 th of January 2003 as 
WS 23 of 2003. 

The earlier claim WS 805 of 2001 was filed by a different lot of plaintiffs represented 
by Blake Dawson Waldron Lawyers (BDW) and then by Posman, Kua and Aisi 
lawyers (PKA) when the action officer Mr. Goiye Gileng joined PKL after resigning 
from BDW. The claim is still pending. PPL were initially briefed by the State to 
defend the matter. Using evidence provided by the Simbu police, PPL filed a defence 
and successfully set aside default judgment obtained by the plaintiffs. Instructions 
from police in Simbu clearly stated that the damage was caused by tribal enemies of 
the plaintiffs clan who took advantage of the police and CIS presence which had 
caused people to abandon their properties and flee into the bushes to hide. Simon 
Kauba the current Divisional Commander for the Highlands region was Simbu 
Provincial Police Commander at the time. He gave evidence to the Col confirming 
that the Police never destroyed anything 3 . Yet PPL did not feel constrained by this 
knowledge because it went ahead and filed law suit for Umba Y Gabriel and others, a 
claim which arose from the exact same facts although the plaintiffs were different. 
Not only that, it managed to negotiate settlement with the Solicitor General on whose 
behalf it had steadfastly defended the related court proceedings in Joseph Witne 
Baundo and Others. 



' Refer Transcript # 102 from pg. 3300. 

191 



Later proceedings registered as OS 58 of 2006 4 and OS 755 of 2008 5 were filed by 
disgrunded co-plaintiffs of Gabriel Yer Toi in their efforts to get Mr. Yer to pay them 
their part of the payout. The two actions are still pending. At the same time a lot of 
pressure is being put on Mr. Gabriel Yer by his own tribesman outside of Court to pay 
them their share. 

A. DOES THE MATTER FALL WITHIN THE TERMS OF REFERENCE? 



This matter falls under TOR No. 1, 5, 8,10 & 12 (see attached copy of 
TOR). 

Firstly the amount claimed is over K300,000 and was paid out in 2004. The 
claim was settied out of court by a Deed of Release. This case also highlights 
the involvement of very senior governmental officials including the current 
secretary for DoF, Mr. Gabriel Yer, the then Secretary for the Department 
of Justice and Attorney General (henceforth DJAG) Mr. Francis Damem 
and the Solicitor General then, Mr. Zachary Gelu. Of significance is the role 
played by private law firm, Paul Paraka lawyers (henceforth referred to as 
PPL) which seems to have had a very close relationship with all three of 
them and Mr. Thaddeus Kambanei 6 . In fact PPL acted for Mr. Gabriel Yer, 
Mr. Gelu, Mr. Damem and Mr. Kambanei throughout the period of the 
Inquiry. PPL has also fought relentlessly both directly and through its 
satellite law firms 7 to prevent the Col from carrying out its mandated tasks 
by filing numerous challenges in both the National and Supreme Court. 

V 



Paulus Kama v. Gabriel Yer Toi, Thadeus Kambanei & State. Action filed by Henaos lawyers seeking orders to remove 
Gabriel Yer as plaintiff in WS 1231/02 and to pay monies received in settlement of claim into National Court Trust 
account. 

5 Mandai Aglua & 225 others v. Gabriel Yer & John Wau. Action filed by Gabriel Gendua Lawyers seeking similar orders as the above. 
Specific orders sought for court to make declaration that Gabriel Yer is in fact Umba Y Gabriel and not entitled to be a plaintiff in WS 
23/03. 

6 Secretary for DoF at time claim settled and request sent by Attorney General to Finance for payment. 

7 Firms run by ex - employees of PPL including Nicholas Tame of NTame Lawyers, Mr. Jack Nalawaku of Nalawaku Lawyers, Mr. 
Dick Korowa Kipoi of Kipoi Lawyers and Mr. Kumoro Sino of Sino Lawyers. 

192 



B. SOURCE OF INFORMATION AND DOCUMENTATION 



This brief comprises of facts and findings from the files and records of; 
The Solicitor- General's office 
The National Court Registry at Waigani. 
The Department of Finance 
Evidence given to COI by Mr. Joseph Biangigl 
Evidence given to COI by Mr. Goiye Gileng 
Evidence given to COI by Mr. Billy Bonner 
Evidence given to COI by Mr. Gabriel Yer 

Written evidence given to COI by the Chief Electoral Commissioner, 
Mr. Andrew Trawen 

Evidence in writing given to COI by the Bank of South Pacific 
Evidence in writing given to COI by Harvey Nii lawyers 
Evidence given to COI by Mr. Gabriel Gendua of Gendua Lawyers 
Written evidence given to COI by Mr. Kama Paulus (co- plaintiff) 
Written evidence given to COI by Mr. Kain Wosae 
Written evidence given to COI by Mr. Joseph Witne Baundo 



C. RELEVANT FACTS (CHRONOLOGY) 

The Matter 

1 . The claim arose from an alleged combined police and CIS raid on 
several villages in the Gena area of Kerowagi District in Simbu 
Province on the 19 th and 20 th August 2000. The raid allegedly resulted 
in the burning down of houses, theft or killing of livestock, assault on 
plaintiffs, destruction of cash crops and other property and 
desecration of burial sites. The total loss of property claimed as lost 
and physical injury suffered added up to Kl,649,130. 



193 



Despite the denials by Mr. Simon Kauba, it is within reason to infer that the 
Police and CIS did indulge in some destruction of property and assault on 
people though not to the extent claimed. The raids were done to track down 
high powered assault rifles from suspects who had broken into and stolen same 
from the armoury of the Barawagi jail in Simbu Province. The police and CIS 
personnel would have vented their frustration on the villagers as the theft of 
weapons from under their very noses would have been felt deeply indeed as a 
direct and even personal challenge to members of the two disciplined forces 
based in Simbu. 



// 3. In September 2002, Mr. Gabriel Yer filed a writ of Summons WS 1231 /02"and 

put his name, Gabriel Yer Toi as lead plaintiff on behalf of himself and 225 
others. This matter was never pursued and still remains pending in the National 
Court giving rise to the possibility that it could be used to reclaim the money 
returned to Finance in 2008 once the Commission of Inquiry into the Finance 
Department has ceased and things return to 'normal business as usual'. Perhaps 
this was the reason that the amount paid out in 2004 was returned without 
hesitation to the DoF when the Col began investigations. 

4. Earlier, on the 12 th of July 2002 (two years after the raid), Mr. Gabriel Yer wrote to 
the Attorney General giving notice of his intention to claim pursuant to section 
5 of the Claims By and Against the State Act. The subject matter of the letter is 
captioned: "Notice of Intention to Make a Claim Against the State out of 
time...". The letter was addressed to Mr. John Kumura, who was Acting 
Solicitor General. The matter of seeking leave to make a claim out of time 
under Section 5(2)(c) is a matter for the Attorney General to make such a 
decision and not the Solicitor General. Therefore this letter should 



194 



have been written to the Attorney General and not the Solicitor General. 

In the second paragraph of the letter of 12 July 2002, Mr. Yer states the 
purpose of the letter to be: "to comply with the requirements of Notice 
under the claims By and Against the State Act 1996. Since the raids 
occurred some nearly two years ago, I am writing to you to seek an 
extension of time under Section 5(2)(c)(i) of the Claims By and Against 
the State Act 1996." Mr Yer then gave reasons for the delay. The letter is 
legally and procedurally incorrect because when a possible claim is out of time 
as this one was, the consent of the Attorney General must be obtained to give 
a Section 5 notice out of time. This is a requirement under Section 5(2)(c) of 
the Claims By and Against the State Act (CBASA). Only after the Section 5(2)(c) 
permission is obtained from the Attorney General, then a Section 5 Notice of 
Intention to Make a claim Against the State can then be made within such 
time allowed by the Attorney General. These are two separate processes both 
in time and sequence and also in law. Mr. Yer's letter of 12 July 2002 however 
intended to and did eventually accomplish both of these in the one and same 
letter. 

Although the letter was addressed to Mr. John Kumura, Mr. Damem, 
Secretary for DJAG, responded by letter dated 21 August 2002. He wrote... "I 
note your Notice of Intention to Sue the State. I also note that your notice is 
out of time. I also note your reasons for delay in giving notice. I have 
considered the reasons for the delay in giving notice. I am satisfied with the 
reasons given. I therefore grant you leave to give notice out of time. You are 
given 21 days within which to lodge a formal notice of claim against the 
State." (emphasis added). 



195 



Clearly Mr. Damem's letter only granted leave to Mr. Yer and others to lodge a 
formal section 5 Notice of Claim Against the State within 21 days. Presumably 
the Attorney General would then assess the late s.5 Notice and make a 
determination about whether it was proper in form and had sufficient detail 
before accepting it as proper s.5 notice. 

Mr. Yer did not make a formal Section 5 Notice of Claim Against the State, 
and have it personally served (as required under s.5 (3) of the CBASA) either 
on the Acting Solicitor General or the Attorney General within the 21 days 
period granted to him. Instead, Mr. Yer proceeded to file proceedings in WS 
No 1231 of 2002 on 19 September 2002. 

In WS No. 1231, the mandatory Notice of Intention to Make a Claim against 
the State was never served on either the Attorney General or the Solicitor 
General as required under Section 5 of the CBASA. The purported Section 5 
Notice of the letter of 12 July 2002 is a nullity. The letter of 12 July 2002 does 
not and cannot qualify as a Section 5 Notice for various reasons, including: 

• letter only sought leave to make a claim against the State out of time 
pursuant to s.5(2) of the CBASA; 

• leave to serve a formal Notice of Claim Against the State was granted by 
the letter from the Attorney General on 21 August 2002, but the Plaintiffs 
did not follow through with service of a formal Section 5 Notice as 
required under s . 5 (1) and (3) of the CBASA which together require 
personal service. 



196 



9. At Paragraph 7 of the Statement of Claim in WS 1231 of 2002, the plaintiffs 
did not clearly plead that they had properly filed a Section 5 Notice of Claim 
Against the State or that they had sought leave from the Attorney General to 
file their claim out of time in their letter of 12 July 2002 and that they had 
been granted leave to file within 21 days and that they had filed their Section 5 
Notice within time. 

10. Four months after filing WS 1231/02 in January 2003 another claim was 
purportedly filed by a person called Umba Y. Gabriel on behalf of himself and 
225 others in Proceeding WS 23/2003. This time the claimants were 
represented by Paul Paraka Lawyers. Except for the change in the name of the 
principal plaintiff from Gabriel Yer Toi to Umba Y Gabriel all the other 
details including the names of the plaintiffs, the Defendants and the pleadings 
were exactly the same as the action filed by Mr. Gabriel Yer in WS 1231 of 
2002. In the list of plaintiffs the lead plaintiff is named only as Umba Y G. 
There is no explanation as to why the person's middle name and surname 
were abbreviated to mere initials. The National Court Registry has told the Col 
that file WS 23/2003 is not registered in their system. 

1 1 . WS No. 23 of 2003 did not comply with all the requirements of Section 5 of 
the CBASA. Since these were new proceedings, it was mandatory that a 
Section 5 Notice of Intention to Make a Claim Against the State had to be 
made. Given that the claim was out of time, a Section 5 (2) leave to make a 
claim out of time had to be obtained, and then a formal Notice of Claim made 
and personally served on either the Solicitor General or the Attorney General. 
None of these happened. Non compliance with Section 5 of the CBASA is 
fatal — rendering the claim a nullity because of the mandatory wording of 
Section 5 (1): "No action to enforce any claim against the State lies 



197 



against the State unless notice in writing of intention to make a claim is given in 
accordance with this section... ".This makes WS No. 23 of 
2003 an unlawful claim. 

Evidence on file suggests that in 2007, the principal plaintiff in WS No. 23 of 
2003 - Umba Y Gabriel - was a pupil in Grade 5, Class 5.1 at the Port Moresby 
Grammar School. Umba Y Gabriel is the son of Gabriel Yer and Nigl Zerike 
and was born on the 01 st of May 1994 in Port Moresby. If this is so, then the 
principal plaintiff in WS No. 23 of 2003 is a minor, and therefore did not have 
the capacity to sue. At the time when the proceedings were filed, he would 
have been only 9 
years old. 

Further to the above, the Electoral Commission has provided written evidence 
to the Col that in the entire electorate of Kerowagi, Simbu Province, there was 
only one registered voter named Umba Gabriel described as a Subsistence 
Farmer of Genakeglaku Ward in Gena Waugla local level Government area. 
Born in 1986 he would have been about 14 years old in the year 2000 when the 
raids took place. He would also have lacked capacity to sue in person and 
would have needed an adult to act as his 'next friend' if indeed he is the elusive 
Umba Y Gabriel named in WS 23 of 2002. 

On the 15 th of February 2003, Paul Paraka Lawyers acting for the Plaintiffs 
executed a Deed of Release with the then Solicitor General, Mr. Zachary Gelu 
in the matter of Umba Y Gabriel WS No. 23 of 2003 and settled for the sum of 
Kl,667,925.56. Mr. Paul Paraka personally signed the Deed of Release on 
behalf of the plaintiff. Note that 4 days later on 19 February 2003, Mr Gelu as 
Solicitor General 



198 



filed a Notice of Intention to Defend in the related matter of Gabriel Yer Toi 

WSNo. 1231 of 2002. 
Questions: 1. Was the Solicitor General ever aware that these two matters were related? 

2. Whether Varaka Lawyers were at that time Acting for the State in all civil matters, 
including this one? 



15. On March the 3 rd 2003, Mr. Zachary Gelu, the Solicitor General wrote to the 

then Secretary for Finance, Mr. Kambanei and requested payment in WS No. 

23 of 2003 since they had been settied out of court by a Deed of Settlement 

and Release. He requested that the full payment of Kl, 667, 925.56 be made 

payable through the 
* Trust Account of PPL, lawyers for the Plaintiffs. 

16. Now comes the first surprise move done by PPL. On the 18 th of March 2004 
PPL wrote to Secretary Kambanei and advised that they had ceased to act for 
the Plaintiffs in Umba Y Gabriel «& 225 Others -v- The State, WS 23 oJ2003 and 
that the Plaintiffs were now represented by Harvey Nii Lawyers. PPL asked 
Finance to pay the full sum into the Trust Account of Harvey Nii Lawyers. It 
is not clear why the plaintiffs decided to instruct a new lawyer after PPL had 
successfully negotiated a setdement with the Solicitor General's office for the 
full amount sought in the Writ. All that remained to be done was to collect 
the money from Finance. Again Mr. Paul Paraka has failed to explain why he 
relinquished the case and forfeited his full legal fees by allowing the clients to 
instruct a new lawyer after his firm had done such magnificent work in 
settling the matter so swiftly. 

17. None of the plaintiffs in the Umba Y Gabriel matter gave evidence to the Col 
to explain why the decision was made to engage another lawyer at that stage 
of the proceedings. In the absence of any 



199 



evidence of dissatisfaction on the part of the plaintiffs against PPL it is open to 
the Commission to find that this was a deliberate move orchestrated by PPL to 
confuse anyone who might later investigate 
J and follow the paper trail to PPL's doorstep. 

18. PPL has kept right on representing Mr. Gabriel Yer during the Inquiry. Umba 
Y Gabriel has been represented at the Inquiry by a plethora of lawyers 
beginning with Mr. Harvey Nii, then Paul Othas of PPL. Then by known 
associates and ex — employees of PPL including Mr. Jack Nalawaku, Mr. Dick 
Korowa Kipoi of Kipoi lawyers and finally by Mr. Kumoro Sino of Sino 
lawyers. Such dedication by a law firm to ex - clients who had previously been 
ungrateful and dumped them as their lawyers in favour of another firm, is 
remarkable. It is also very suspicious when it comes to working out their 
motives for doing so. 

19. On the 22 nd of March 2004, the then Attorney General himself, Mr. Francis 
Damem wrote to the Secretary for Finance and advised that PPL had ceased 
acting for the Plaintiffs in the matter of Umba Y Gabriel <<& 225 Others -v- The 
State, WS No. 23 of 2003 and that Harvey Nii Lawyers were now their lawyers 
and requested for the setdement payment to be made payable to Harvey Nii 
Lawyers Trust Account. In this same letter, Mr. Damem endorsed the decision 
of the Solicitor General to settle this matter out of court. 

20. This action by Mr. Francis Damem is remarkable. Mr. Damem as Secretary for 
Justice and the Attorney General at the time did not need to write that letter. 
This task was one normally done by the Solicitor General. The Commission 
finds that his actions raises 



200 



suspicions about whether Mr. Damem had a personal interest in the outcome 
of this claim. 

21. On the 26 th of March 2007, Harvey Nii Lawyers wrote to the then Secretary 
for DoF, Mr. Thaddeus Kambanei and requested payment in this matter of 
WS No. 23 of 2003 as agreed to under the Deed of Setdement. Mr. Kambanei 
prompdy endorsed payment for the full amount as requested. Less than a 
month later, on the 24 th of May 

« 2004 a Cheque of Kl,667,925.00 was made payable to Paul Paraka Lawyers but this 
cheque was cancelled. 

22. On the 12 th of July 2004 through payment voucher GE:990161 a replacement 
Cheque for Kl,667,925.00 was raised and made payable to Harvey Nii Lawyers 
Trust Account for the setdement payment of Umba Y Gabriel & 225 others. 

23. Mr. Thaddeus Kambanei was represented by Mr. Guguna Garo, a Senior 
Associate in PPL, at the Inquiry hearings when he was summoned to give 
evidence. His relationship with the firm of PPL has endured like that of Mr. 
Francis Damem and Mr. Zachary Gelu. Again it is open for the Col to make a 
finding that the firm of Paul Paraka Lawyers had a close relationship with the 
highest officials in DJAG (Secretary Damem and Solicitor General Gelu) and 
the boss of DoF, Mr. Kambanei and his deputy, Mr. Gabriel Yer. 

24. On the 19 th of February 2008 the ftiU amount of Kl,667,925 was returned to 
the DoF by Harvey Nii Lawyers. In his cover letter dated 19/02/08, Mr. Nii 
said the funds had been held in his firm's Trust Account since it was paid on 
1 6 th July 2004 ... "on instruction of our clients pending a resolution of various disputes among 
our clients on the 



201 



distribution of the settlement monies.. .In view of above and coupled with the recent NEC 
derision in early 2006 which halted all out of court settlements being paid based on the 
landmark Supreme Court judgment in the case of NCDC and Yam a Security 
Services Limited, our client has accordingly instructed us to reimburse the money back to 
the State. ' s Mr. Nii ends his letter with the remark that ... "The claimants can pursue their 
cases normally and have them proven before the Court of Taw". Any future claims arising from 
the raids conducted in Gena tribe in the year 2000 are now well and truly time barred under 
the Fraud and limitations Act and so one would have to wonder which Court Harvey Nii 
Lawyers expect Umba Y Gabriel and his co-plaintiffs to pursue their claims in? 



ORAL EVIDENCE GIVEN TO COMMISSION 



A. Mr. Gabriel Yer 



Gabriel Yer is the current Secretary for DoF. Aged about 45 years, he is from the 
Gena area of Kerowagi District in Simbu Province. He is an Accountant by profession 
and joined DoF in 1990 soon after graduating from university. Rising swiftly through 
the ranks, he was Acting First Assistant Secretary for Public Accounts division when 
the raids were conducted in Gena. 9 In 2002 when he filed WS 1231/02 he had already 
been promoted to Deputy Secretary DoF and was still in that position in 2004 when 
the cheque was approved and paid to Umba Y Gabriel c/- Harvey Nii Lawyers Trust 
Account. In the year 2007 he was elevated to become Secretary for DoF and was in 
that post when he received the amount of Kl ,667,925 back from Harvey Nii Lawyers 
in 2008. 



Letter is Annexure "E" in Affidavit of Gabriel Yer sworn on 31 s May 2009. 

5 See page 4268 in Col Transcript # 120 
202 



Mr. Yer gave evidence on the 12 th of August 2009 in relation to the matter of Umba 
Y Gabriel. 10 From the start he maintained that he did not know anything about the 
matter of Umba Y Gabriel. He also made the startling revelation that he had drafted 
the Writ of Summons in WS 1231/02 himself without help from any qualified lawyer 
because as he said he had seen many summons in his working life to know what to 
do 11 . Despite this, he said in evidence that he had never been aware that the matter of 
Umba Y Gabriel was exactly the same as his claim except for the change in the name 
of the lead plaintiff. 12 

In summary the following can be gleaned from his evidence: 

• In 2000 he was living and working in Port Moresby but said he had lost 
properties amounting to K20,000 that he had left in his father's house in the 
village. His property damaged in the raid consisted of radios, sewing machines 
and a laptop used for work which was inexplicably left behind in the village. 
Mr. Yer promised to provide a list of his properties to the Col but has failed 
to do so. 

• His father Mr. Yer Toi is listed as plaintiff No. 37 on both WS 1231/02 and 
WS 23/03 and purportedly suffered damages worth Kl 0,000. 13 

• Gabriel Yer himself flew 12 leaders of the Gena Nolku tribe down to Port 
Moresby. This group authorized him to file Court action to claim for 
destruction caused by Police and CIS personnel. 



Refer Col Transcript # 120 from page 4265 

11 Ibid at Page 4272 

12 Ibid at page 4274 to 4278 
"ibid atpg4270 

203 



He drafted the Writ himself and gave section 5 Notice to State before 
filing his claim in the National Court. 

In evidence he said ... "There are a number of two or three Umba Y Gabriels at 
home. There is an Umba, Mr. Y is a name and Gabriel and there is another 
Umba Gabriel, they are all at home" (sic). 14 . 

Gabriel Yer denied that his son is named Umba Y Gabriel. Instead he is called 
Umba Yer. 

Gabriel Yer said he did not pursue his case after filing it in 2002 because he felt 
that it would be a conflict of interest if he prosecuted the case while being 
employed as Secretary for DoF. 

While he was Deputy Secretary for Finance he was aware of the claim of Umba 
Y Gabriel as one among many that passed through his desk for payment. But 
he said that he did not realise that the claim arose from the raids in Gena on 
which his own claim was based. 

In his Affidavit of 31 st May 2009 he described Paulus Kama and Joseph 
Biangigl as his tribal enemies. He recanted this unambiguous statement when 
he gave sworn evidence to the Commission and said that what he really meant 
was that they were his relatives but were acting like enemies. 15 

Gabriel Yer denied bringing K1.6 million to a room at the Ponderosa hotel in 
Port Moresby and sorting it out for payment with Joseph Biangigl and other 
leaders of Gena Nolku tribe. 



' Page 4273 of Col transcript H120 
' Page 4280 

204 



• However he did not deny that during discussions he did say that he would fly 
the money into the village by helicopter. 16 

• Yer denies ever instructing Paul Paraka Lawyers to act in his matter or Umba 
Y Gabriel's matter 

B. A.CP Simon Kauba 

Mr. Kauba is an Assistant Commissioner of Police (ACP) and is currendy the 
Highlands Divisional Commander. He gave sworn evidence to the Col on Tuesday 
the 19 th of May 2009 at Mt. Hagen. 17 He was summoned to give evidence on a 
number of cases. His evidence in relation to the claim by Umba Y Gabriel consisted 
of the following, summarized in point form: 

• ACP Kauba was the Provincial Police Commander of Simbu Province at the 
time of the alleged raids in Gena. 

• He was out in the field with his men and trying to contain a long standing 
tribal fight between the two biggest tribes in Gena area of Kerowagi. 

• It was during this time that members of one tribe broke into the CIS armoury 
at Barawagi jail and escaped with a large number of high powered guns. 

• ACP Kauba denied that the Police and CIS were in any way responsible for 
the destruction and theft of property. Instead he 



"" At pg 4280 

" COI Transcript #120 from pg. 3300 



205 



blamed the destruction on opportunistic tribal enemies of those who fled into 
the bushes to hide. 

• Mr. Kauba also said under his command his policemen had gone into the 
operation with what he termed 'strict standing orders'. Further to that foil 
briefings were conducted to inform personnel going out of the dos' and don'ts 
of the operation. 

• ACP Kauba said after the alleged raids he did not know that several cases were 
filed in the National Court alleging unlawful acts by police. He said the Solicitor 
General's office never communicated with him to seek instructions. 

• Mr. Kauba made some useful suggestions that the system should be changed so 
that it became mandatory for Police out in the Provinces to be notified as soon 
as any case on Police raid allegation was commenced (section 5 Notice stage). 

C. Mr. Joseph Biansigl 

Mr. Biangigl is a subsistence farmer from Gena Nolku Tribe. He is listed as plaintiff 
number 5 in both WS .1231 of 2002 and WS 23 of 2003. He is now among the group 
of 225 disgruntled plaintiffs who have taken court proceedings against Mr. Gabriel 
Yer 18 to force him to pay their share of the money they say he received after the claim 
(WS 23/03) was settled out of court. He gave sworn evidence to the Col on 
Wednesday 20 th May 2009 in Mt. Hagen. A summary of his evidence is as follows: 

• After the combined raid in his village he travelled to Port Moresby with another 
plaintiff called Kama Paulus. There they instructed Kuman lawyers to file their 
claim. 



* OS 255/08 Mandai Aglua & 225 others v. Gabriel Yer & John Wau. 

206 



Before they could proceed further they were approached by Gabriel 
Yer who promised to take up their matter. He said he would "assist 
on the release of funds side". 19 Both agreed to Mr. Yer's suggestion 

The two men were told to wait until further advice. The two stayed 
with Gabriel Yer until 2004 when Yer told them he had got the 
money and would give their share soon. 

No money was forthcoming until the next year 2005. In that year 
Gabriel Yer travelled to the village in Kerowagi and again bought 
plane tickets for twelve people to accompany him to Port Moresby. 

In Port Moresby the group waited three more months until Yer 
finally got the money. One night, the group of twelve met with 
Gabriel Yer, his wife Ranu Yer and sister Korai Yer, at the Ponderosa 
hotel. Others in the group were named as John Wau, Gigimai 
Boronge, Gigmai Wemin, Puka Wemin, Batme Gigmai, Gemene 
Makus, Gent Vincent, Joseph Biangigl and Bomai Pama. 

According to Joseph Biangigl, this group all fitted into a single hotel 
room. There Gabriel Yer brought in a large bag or case with wheels 
on it. When opened he saw that it was staffed full of cash all in 50 
kina notes. 

Led by John Wau, the group began counting the money. The money 
was bundled into packs containing K5,000 each which were then 
placed into envelopes with names of individuals written on them. 



' Coi Transcript # 120 @ pg 3459. 

207 



Some days later Joseph Biangigl was told to go back to the village in Kerowagi 
and prepare for Gabriel Yer to fly in on a helicopter and deliver the money to 
the people. In great anticipation and joy the villagers went about constructing a 
platform to be used as the stage. Pigs were gathered for slaughter and 'flower 
girls' were organized for the momentous day. 

Much to their dismay, Gabriel Yer never made the grand appearance by 
helicopter that he had promised. Mr. Biangigl testified that none of the 
plaintiffs ever received any of the promised money. 



OTHER EVIDENCE 

1) Mr. Goiye Gileng 

Mr. Gileng gave sworn evidence to the Commission. Much of what 
he says has been covered in the introduction to this brief. He 
produced several affidavits sworn by co plaintiffs of Gabriel Yer in 
WS 1231of 2003. One of them, Paulus Kama's evidence is discussed 
below. 

2) Mr. Paulus Kama 

Paulus Kama is the 03 rd named plaintiff in both WS 1231 of 2002 and 
WS 23 of 2003. He filed an Affidavit saying that at a gathering at Mr. 
Gabriel Yer's Boroko house, he was heard to say that he was upset 
with people complaining about his handling of the matter. Mr. Yer 
threatened at that meeting that he would return all the money to the 
DoF and would leave the plaintiffs themselves to go to court and get 
it back if they could. 



208 



PAYMENT S BY FINANCE 

1) Cheque # 779264 paid to Paul Paraka Lawyers dated 24/05/2004 was not 
paid from lawfully available funds. It was paid out of the Suspense account 
Trust fund 460 — 31. 

2) Likewise the replacement cheque # 784512, dated 16/07/2004 was paid from 
the same account No 460 - 31. 

COMPLIANCE ISSUES 

1) There was breach of section 61 of the Public Finance (Management) A.ct when 
Ministerial approval was not sought before Zachary Gelu signed the Deed of Release. 

2) There was no section 5 Notice given under the Claims by and against the State 
Act 1996. 

3) NEC Decision of NG 07/2002 on 22 August 2003 directed that there be no more out 
of court setdements by any State body or authority, including by the Attorney General 
and Solicitor General, without the approval of the NEC acting on advice from the 
CACC. Mr. Gelu as Solicitor General chose to disregard this NEC directive when he 
signed the Deed of Release on 15 th February 2003. 

4) NEC Decision NG 07/2002 Clause 10 was rescinded by a subsequent NEC Decision 
150/2003 of July 25, 2005. Note that this was well before the Deed of Settlement and 
Deed of Release to effect the out of court settlement was executed on 1 5 February 
2003. Nevertheless this particular 



209 



NEC decision, at Paragraph 5, only directed the Solicitor General, in consultation with 
the Attorney General "to setde any future claims for amounts only up to Kl ,000.000" 
only if they are satisfied that the claim is genuine and that there is no defence and has 
complied with all the processes under the CBASA. Paragraph 6 of this particular NEC 
Decision NG 07/2002 states that "all out of court setdements in access of K1,000,000 
are to be approved by the NEC prior to any payments by the Department of Finance." 

Note that the setdement payment in Umba Y Gabriel WS No. 23 of 2003 was made 
through their lawyers, Harvey Nii Lawyers on or about 12 July 2004. Even so, NEC 
Decision 150/2003 of 25 July 2003 requires that all out of court setdement payments 
above Kl ,000,000 must be approved by the NEC prior to payment by Finance. NEC 
approval was not obtained before the setdement payment was made on 12 July 2004. 
To this extent this payment fails to comply with the NEC Decision 150/2003. 

FINDINGS 

1) There was a combined raid by Police and CIS into the Gena area and some 

unlawful acts may have been carried out, but not to the extent claimed, ie., to 
over 400 households (if plaintiffs in WS 850/2001 and WS 1231/02 are 
combined). 



2) Mr. Gabriel Yer personally did not suffer any injury to his property or to his 

person to claim damages in WS 1231 of K20,000. He therefore lodged a false 
claim. 



210 



Mr. Gabriel Yer used his position as Deputy Secretary of DoF to benefit 
himself. 

WS 23 of 2003 was lodged by Gabriel Yer with help from Paul Paraka 
Lawyers when he realised the controversy that would be caused if his name 
was associated with a successful claim against the State while he was serving 
as Deputy Secretary. 

Writ of Summons 23 of 2002 was never filed in the National Court. It is a 
fabrication done by Paul Paraka Lawyers as a cut and paste job from WS 
1231/02. 

Umba Y Gabriel is the name of Gabriel Yer's son born on the 01 st of May 
1994 and is not a real adult person of the Gena area of Kerowagi District, 
Simbu province who suffered injury in the year 2000 from unlawful acts by 
servants of the State. 

The Solicitor General's Office was extremely reckless or negligent in its 
handling of this matter. 

The SG at the time, Mr. Zachary Gelu connived with Mr. Paul Paraka of PPL 
and Mr. Gabriel Yer to pursue"^i37orexpedite this claim and payment. 

The Solicitor General's office never sought instructions from Police in Simbu 
Province. 

The office of Solicitor General was reckless or negligent in not ascertaining 
the validity of the claim. 



211 



11) Mr. Zachary Gelu as Solicitor General knew of the Defence filed in WS 1231 
of 2002 - Gabriel Yer Toi v. State & 5 Others. He would therefore have known 
that the claim in WS 23 of 2003 was an exact same replica ofWS 1231 of 2002. 

12) By going ahead to sign the Deed of Release on 15 th of February 2003 Mr. Gelu 
knew that the claim was not properly verified as truthful. 

13) Paul Paraka lawyers acted for the State as defendant in the matter of WS 
805/01 Joseph Witne Baundo and later acted for the plaintiff claimants in WS 
1231/03, Umba Y Gabriel. They were clearly acting in conflict of interest. 

14) Because Paul Paraka signed the Deed himself on 15 th February 2003 instead of 
Umba Y Gabriel, a finding can be made that there was never such a person to 
start with. 

15) Lawyer Mr. Kumoro Sino lied to the COI about receiving instructions from 
Umba Y Gabriel in Mt. Hagen City. 

16) Mr. Kumoro Sino fabricated evidence filed in the National Court Judicial 
Review proceedings OS (JR.) No. 377 of 2009. In those proceedings he 
committed perjury by filing an Affidavit in Support and an Affidavit verifying 
Facts under the name of Umba Y Gabriel when there was in fact no such 
person as Umba Y Gabriel. 

17) Mr.Mario Cueva a senior officer of the Department of Finance, Cash 
Management branch gave evidence in favour of Umba Y Gabriel to confirm 
that Harvey Nii Lawyers had returned the amount in full. Mr. Cueva did this in 
mid May 2009. A finding is made that he had 



212 



1 8) knowledge of this from the 19 th February 2008 and failed to assist the 
COI by imparting that important piece of intelligence. A finding is 
made that Mr. Cueva was covering up for his boss Gabriel Yer. 

19) Ms. Josephine Dinni of the Department of Finance also swore an Affidavit 
similar to Mr. Mario Cueva. The same findings as were made of Mr. Cueava is 
made of Ms Dinni. 

20) There was breach of the Public Finance Management Act. Payment of cheque 
# 779264 paid to Paul Paraka Lawyers dated 24/05/2004 was not paid from 
lawfully available funds. It was paid out of the Suspense account Trust fund 
460-31. 

21) Likewise the replacement cheque # 784512 dated 16/07/2004 was paid from 
the same account No 460 - 31. 



RECOMMENDATIONS A 

ALr_ 



1. That Mr. Gabriel Yer is terminated forthwith from the job of Finance Secretary for 
showing his total willingness to rort the system. 



2. That Gabriel Yer is referred to the Police Fraud Squad for further 
investigations. 

3. That Paul Paraka Lawyers are referred to the lawyers Statutory 7 

Committee for that body to deliberate on whether the firm has 

committed any breach of ethics by filling a lawsuit with the full 

knowledge that the claim was a false one. As discussed above (@ pg. 

3)PPL had been acting for the State in defending an earlier action WS 

213 



805 of 2001 and in the process had received clear evidence from Simbu Police 
denying any unlawful acts. By acting for Umba Y Gabriel and others PPL were 
in a conflict of interest situation. 

4. Paul Paraka is referred to the Police Fraud Squad for further investigations for 
colluding with Gabriel Yer to make a claim under false pretences. 

5. Mr. Kumoro Sino is referred to the Police for investigations to determine 
whether perjury charges should be laid against him. 

6. That the Solicitor General apply for summary dismissal of the claim for failure 
to comply with the requirement for section 5 Notice under the CBASA 

7. That the Solicitor General applies to have the matter of Gabriel Yer Toi 
summarily dismissed for want of prosecution (8 years has lapsed since date of 
filing writ). 

8. Alternatively that the trial is expedited and the matter is defended to the fall and 
Gabriel Yer is cross examined in the witness box to test his credibility and the 
veracity of his claim. 

9. Following ACP Kaupa's suggestion, changes are made to alert Police in the 
provinces as soon as section 5 notice of claims against the State are lodged with 
the Attorney General's office. 

10. That practices be put in place for Police and the Solicitor General's office to 
liaise with each other regularly and with a view to providing reports and 
instructions expeditiously. 



214 



Generally that the Solicitor General should be restricted in the amount he/she 
can sign off in Deeds of Setdement that bind the State. Perhaps to less than 
K50,000. Further that the Secretary for DJAG should also be constrained in 
the amounts he/she can commit the State to say Kl 00,000. Any amount over 
this cap should go to the NEC for approval. 



215 



APPENDIX "A" (LIST OF PLAINTIFFS' 



No. 


NAME 


CLAN 


AMOUNT 
CLAIMED 


1 


UmbaY. G. 


Gena Noglku - Paglaukane 


K20,000.00 


2 


Waim Kama 


Gena Noglku - Paglaukane 


K 5,000.00 


3 


Paulus Kama 


Gena Noglku - Paglaukane 


Kl 0,000.00 


4 


Jim Waim 


Gena Noglku - Paglaukane 


K20,000.00 


5 


Joe Biangle 


Gena Noglku - Paglaukane 


Kl 0,000.00 


6 


Peter Kunma 


Gena Noglku - Paglaukane 


K 5,000.00 


7 


Kaiglo Kama 


Gena Noglku - Paglaukane 


IC 5,000.00 


8 


Waim Kama (junior) 


Gena Noglku - Paglaukane 


K 5,000.00 


9 


Peter Waim 


Gena Noglku - Paglaukane 


Kl 0,000.00 


10 


Kombrisunga Waim 


Gena Noglku - Paglaukane 


K 6,100.00 


11 


Klen Bagime 


Gena Noglku - Paglaukane 


K 5,000.00 


12 


Nombri Y 


Gena Noglku - Paglaukane 


K 5,000.00 


13 


John Jerry 


Gena Noglku - Paglaukane 


K 6,000.00 


14 


Ende Yomba Nombri 


Gena Noglku - Paglaukane 


K 8,000.00 


15 


Mauwi Nombri 


Gena Noglku - Paglaukane 


K 5,500.00 


16 


Kagl Kominde 


Gena Noglku - Paglaukane 


K 6,400.00 


17 


Guand Kagl 


Gena Noglku - Paglaukane 


K 7,100.00 


18 


Bame Kagl 


Gena Noglku - Paglaukane 


K 5,700.00 


19 


Ludwig Kagl 


Gena Noglku - Paglaukane 


Kl 0,000.00 


20 


Kombukun Tei 


Gena Noglku - Paglaukane 


IC 8,000.00 


21 


Boi Kawagle Tei 


Gena Noglku - Paglaukane 


IC 8,000.00 


22 


Enn Tei 


Gena Noglku - Paglaukane 


K 8,300.00 


23 


Umayagle Guand 


Gena Noglku - Paglaukane 


K 4,500.00 


24 


Waim Guand 


Gena Noglku - Paglaukane 


K 6,000.00 


25 


Enn Toimbo 


Gena Noglku — Paglaukane 


K 5,500.00 


26 


Kawagle Kombukum Aglua 


Gena Noglku — Paglaukane 


K 7,000.00 


27 


Taia Kombukun 


Gena Noglku — Paglaukane 
216 


K 6,500.00 



28 


Bombar Kawagle 


Gena Noglku - Paglaukane 


K 5,500.00 


29 


Tei Kawagle 


Gena Noglku - Paglaukane 


K 7,600.00 


30 


Kua Kawagle 


Gena Noglku - Paglaukane 


K 6,000.00 


31 


Bombar Apa 


Gena Noglku - Paglaukane 


K 8,000.00 


32 


Enn Kolkia 


Gena Noglku - Paglaukane 


K 5,000.00 


33 


Grai Kilkia 


Gena Noglku — Paglaukane 


K 6,000.00 


34 


Kaman Ande Kumo 


Gena Noglku — Paglaukane 


K 7,300.00 


35 


Toi Ande Kumo 


Gena Noglku — Paglaukane 


K 6,000.00 


36 


Miugle Ande Kumo 


Gena Noglku - Paglaukane 


K 7,000.00 


37 


Yer Toi 


Gena Noglku — Paglaukane 


Kl 0,000.00 


38 


Apa Toi 


Gena Noglku - Paglaukane 


Kl 0,000.00 


39 


Taia Kagl 


Gena Noglku - Paglaukane 


K 6,000.00 


40 


Aglua Taia 


Gena Noglku - Paglaukane 


K 5,000.00 


41 


Api Kagl 


Gena Noglku - Paglaukane 


K 6,000.00 


42 


Waine Api 


Gena Noglku - Paglaukane 


K 5,500.00 


43 


Waine Kagl 


Gena Noglku — Paglaukane 


K 6,000.00 


44 


Noglai Taia 


Gena Noglku - Paglaukane 


K 6,000.00 


45 


Teine Noglai 


Gena Noglku - Paglaukane 


K 4,500.00 


46 


Demaine Teine 


Gena Noglku - Paglaukane 


K 6,000.00 


47 


Guand Teine 


Gena Noglku - Paglaukane 


K 5,000.00 


48 


Wauglabogle Teine 


Gena Noglku — Paglaukane 


K 4,500.00 


49 


Kagl Wauglabogl 


Gena Noglku - Paglaukane 


K 4,000.00 


50 


Waiwo Waine 


Gena Noglku - Paglaukane 


K 5,000.00 


51 


Waim Waiwo 


Gena Noglku — Paglaukane 


K 6,000.00 


52 


Kagl Noglai 


Gena Noglku - Paglaukane 


K 7,000.00 


53 


Komainde Y 


Gena Noglku — Paglaukane 


K 5,600.00 


54 


Kaiglo Demane 


Gena Noglku — Paglaukane 


K 4,500.00 


55 


Gewi Onguglo 


Gena Noglku — Paglaukane 


K 3,500.00 


56 


Numabo Taia 


Gena Noglku - Paglaukane 


K 4,300.00 


57 


John Kamb Numabo 


Gena Noglku - Paglaukane 
217 b b 


K 7,000.00 ' 



58 


Gewi Raphael 


Gena Noglku — Paglaukane 


K 8,000.00 


59 


Bagle Komainde 


Gena Noglku — Paglaukane 


K 6,350.00 


60 


Suine Komainde 


Gena Noglku — Paglaukane 


K 3,400.00 


61 


Siune Bagle 


Gena Noglku — Paglaukane 


K 6,400.00 


62 


Waugla Bagle 


Gena Noglku — Paglaukane 


K 4,000.00 


63 


Bombar Gabriel 


Gena Noglku — Paglaukane 


Kl 0,000.00 


64 


ApaMikal 


Gena Noglku — Paglaukane 


IC10,000.00 


65 


Gabriel Apa 


Gena Noglku — Paglaukane 


Kl 0,000.00 


66 


Ambane Kagl 


Gena Noglku — Paglaukane 


K 6,000.00 


67 


Ongoglo Kagl 


Gena Noglku — Paglaukane 


K 6,000.00 


68 


Gende Kagl 


Gena Noglku — Paglaukane 


IC 6,400.00 


69 


Peter Kagl 


Gena Noglku — Paglaukane 


K 4,000.00 


70 


Noglai Baglme 


Gena Noglku — Paglaukane 


IC 7,000.00 


71 


Konia Baundo 


Gena Noglku — Paglaukane 


IC 5,000.00 


72 


Gigimai Leo 


Gena Noglku — Paglaukane 


IC 7,000.00 


73 


Wanuwa Temb 


Gena Noglku — Paglaukane 


IC 6,200.00 


74 


Wau Andiyomba 


Gena Noglku — Paglaukane 


K 5,500.00 


75 


Wanuwa Kagl 


Gena Noglku — Paglaukane 


K 7,500.00 


76 


Wau Siya 


Gena Noglku - Paglaukane 


K 4,300.00 


77 


Wamuna Waiya 


Gena Noglku — Paglaukane 


IC 3,500.00 


78 


Damba Wamuna 


Gena Noglku — Paglaukane 


K 4,300.00 


79 


Kagl Noglai 


Gena Noglku — Paglaukane 


K 6,300.00 


80 


Noglai Tenei 


Gena Noglku — Paglaukane 


IC 3,000.00 


81 


Kuglame Duru 


Gena Noglku — Paglaukane 


IC 8,000.00 


82 


Gigimai Kawagle 


Gena Noglku — Paglaukane 


K 4,600.00 


83 


Mondai Kambo Kawagle 


Gena Noglku — Paglaukane 


K 4,000.00 


84 


Parr Gigimai 


Gena Noglku - Paglaukane 


IC 5,350.00 


85 


Wenabo Kagama 


Gena Noglku - Paglaukane 


K 6,800.00 


86 


John Wenabo 


Gena Noglku — Paglaukane 


K 4,800.00 


87 


Kaiglo Wenabo 


Gena Noglku — Paglaukane 
218 b b 


K 5,300.00 



88 


Gigimai Mogli 


Gena Noglku - Paglaukane 


K 5,300.00 


89 


Nimbne Piai 


Gena Noglku - Paglaukane 


K 5,850.00 


90 


MogilParr 


Gena Noglku - Paglaukane 


K 6,400.00 


91 


Noglai Baglme 


Gena Noglku - Paglaukane 


K 7,500.00 


92 


Wanua Baglme 


Gena Noglku - Paglaukane 


K 5,900.00 


93 


Konia Gablme 


Gena Noglku — Paglaukane 


K 6,800.00 


94 


Kianuga Baundo 


Gena Noglku - Paglaukane 


K 7,500.00 


95 


Konia Kawagle 


Gena Noglku — Paglaukane 


K 5,200.00 


96 


Baglme Noglai 


Gena Noglku — Paglaukane 


K 7,800.00 


97 


Gene Mondo 


Gena Noglku — Paglaukane 


K 5,600.00 


98 


Piu Gende 


Gena Noglku - Paglaukane 


K 6,700.00 


99 


Wie Wanua 


Gena Noglku - Paglaukane 


K 7,500.00 


100 


Baglme Sie 


Gena Noglku — Paglaukane 


K 7,500.00 


101 


Kaken Kagl 


Gena Noglku — Paglaukane 


K 4,800.00 


102 


Kaiglo Kagl 


Gena Noglku — Paglaukane 


K 5,900.00 


103 


Kaima Dua 


Gena Noglku - Paglaukane 


K 7,000.00 


104 


Gende Gene 


Gena Noglku - Paglaukane 


K 6,700.00 


105 


Jim Gene 


Gena Noglku — Paglaukane 


K 6,200.00 


106 


Kigl Dm 


Gena Noglku - Paglaukane 


K 6,800.00 


107 


Umba Dru 


Gena Noglku - Paglaukane 


K 6,000.00 


108 


Andrew Y 


Gena Noglku — Paglaukane 


K 8,300.00 


109 


Baglme Gigimai 


Gena Noglku — Paglaukane 


Kl 0,000.00 


110 


Giglma Dua 


Gena Noglku — Paglaukane 


K 7,200.00 


111 


Siune Kawagle 


Gena Noglku — Paglaukane 


K 6,300.00 


112 


Domyagl Umba 


Gena Noglku - Paglaukane 


K 5,700.00 


113 


Wau Domyagl 


Gena Noglku - Paglaukane 


K 7,100.00 


114 


Baglme Onguglo 


Gena Noglku - Paglaukane 


K 5,400.00 


115 


Wau Sie 


Gena Noglku - Paglaukane 


K 5,200.00 


116 


Aglai Apa 


Gena Noglku - Paglaukane 


K 8.000.00 


117 


Kolkia Aglai 


Gena Noglku - Paglaukane 
219 b b 


K 5,800.00 



118 


Mandai Aglua 


Gena Noglku — Paglaukane 


K 7,000.00 


119 


Kondayagl Aglus 


Gena Noglku — Paglaukane 


K 6,100.00 


120 


Kombukun Kaiglo 


Gena Noglku — Paglaukane 


K 5,650.00 


121 


Waugla Kaiglo 


Gena Noglku — Paglaukane 


K 7,000.00 


122 


Mary Waim 


Gena Noglku — Paglaukane 


K 5,000.00 


123 


AlexWai 


Gena Noglku — Paglaukane 


K 5,000.00 


124 


Bonggro Kaiglo 


Gena Noglku — Paglaukane 


K 5,000.00 


125 


Kamane Joseph 


Gena Noglku — Paglaukane 


Kl 5,000.00 


126 


Kamane Kagl 


Gena Noglku - Paglaukane 


Kl 0,000.00 


127 


Apa Gumakambri 


Gena Noglku — Paglaukane 


Kl 0,000.00 


128 


Bomai Apa 


Gena Noglku — Paglaukane 


Kl 0,000.00 


129 


Yer Apa 


Gena Noglku — Paglaukane 


Kl 3,000.00 


130 


Wamuna Bomai 


Gena Noglku — Paglaukane 


Kl 0,000.00 


131 


Ombo Ami Bomai 


Gena Noglku — Paglaukane 


IC 8,000.00 


132 


Peter Ande Gigimai 


Gena Noglku — Paglaukane 


IC15,000.00 


133 


Dombian Gigimai 


Gena Noglku — Paglaukane 


K20,000.00 


134 


Kaima Peter 


Gena Noglku — Paglaukane 


Kl 0,000.00 


135 


Willie Agleagle 


Gena Noglku — Paglaukane 


IC 7,000.00 


136 


Gawi Agleagle 


Gena Noglku — Paglaukane 


K 6,000.00 


137 


Koima Agleagle 


Gena Noglku — Paglaukane 


K 6,500.00 


138 


Kagl Agleagle 


Gena Noglku — Paglaukane 


K 6,200.00 


139 


Yer Umda 


Gena Noglku — Paglaukane 


Kl 0,000.00 


140 


Harry Kindin 


Gena Noglku — Paglaukane 


K 7,000.00 


141 


Gigimai Kuku 


Gena Noglku — Paglaukane 


Kl 0,000.00 


142 


Kawagle Kuku 


Gena Noglku — Paglaukane 


IC 5,000.00 


143 


Biana Baglme 


Gena Noglku — Paglaukane 


Kl 0,000.00 


144 


Mond Willie 


Gena Noglku — Paglaukane 


Kl 0,000.00 


145 


Alphonse Willie 


Gena Noglku — Paglaukane 


Kl 0,000.00 


146 


Debra Peter Gideon 


Gena Noglku — Paglaukane 


Kl 0,000.00 


147 


Wenaimbu Deglbi 


Gena Noglku - Paglaukane 
220 b b 


K 5,000.00 



148 


NiglZ 


Gena Noglku — Paglaukane 


Kl 5,000.00 


149 


Winge Gabriel 


Gena Noglku — Paglaukane 


Kl 0,000.00 


150 


John Kagl 


Gena Noglku — Paglaukane 


Kl 0,000.00 


151 


Roselynne Gigimai 


Gena Noglku — Paglaukane 


K 5,000.00 


152 


Elisabeth Gigimai 


Gena Noglku — Paglaukane 


K 7,500.00 


153 


Gona Gandi 


Gena Noglku - Paglaukane 


Kl 0,000.00 


154 


Korai Willie 


Gena Noglku — Paglaukane 


Kl 0,000.00 


155 


Andrew Apa 


Gena Noglku — Paglaukane 


Kl 0,000.00 


156 


YerWau 


Gena Noglku — Paglaukane 


K 7,000.00 


157 


Kanawi Komade 


Gena Noglku — Paglaukane 


K 5,000.00 


158 


Wamuna Yaglpen 


Gena Noglku — Paglaukane 


K 4,000.00 


159 


Puglma John 


Gena Noglku — Paglaukane 


K 7,000.00 


160 


Kagl Taia 


Gena Noglku — Paglaukane 


K 4,000.00 


161 


Kambuglnoguwa Numabo 


Gena Noglku — Paglaukane 


K 5,300.00 


162 


Bomai Apa 


Gena Noglku — Paglaukane 


K 6,000.00 


163 


Apa Marias 


Gena Noglku — Paglaukane 


K 7,500.00 


164 


Gendi Kuku 


Gena Noglku — Paglaukane 


K 8,000.00 


165 


Ulanua Kagl 


Gena Noglku — Paglaukane 


K 8,500.00 


166 


Umba Kagl 


Gena Noglku — Paglaukane 


Kl 0,000.00 


167 


Yet Kagl - 


Gena Noglku — Paglaukane 


K 5,000.00 


168 


Wau Michael 


Gena Noglku — Paglaukane 


K 5,500.00 


169 


Konia Baglme 


Gena Noglku — Paglaukane 


K 6,000.00 


170 


Waia Wamuna 


Gena Noglku — Paglaukane 


Kl 0,000.00 


171 


Wamuna William 


Gena Noglku — Paglaukane 


K 9,500.00 


172 


Noglai Yaglkops 


Gena Noglku — Paglaukane 


K 9,000.00 


173 


Wai Wamugl 


Gena Noglku - Paglaukane 


K 8,500.00 


174 


Baglme Wai 


Gena Noglku — Paglaukane 


K 7,400.00 


175 


Peter Wai 


Gena Noglku - Paglaukane 


K 6,000.00 


176 


Frank Gene 


Gena Noglku - Paglaukane 


K 7,300.00 


177 


Baglme Yuar 


Gena Noglku - Paglaukane 
221 b b 


K 7,800.00 



178 


Kawage Akepurkwa 


Gena Noglku — Paglaukane 


K 9,600.00 


179 


Baglme Kawagle 


Gena Noglku — Paglaukane 


K 5,700.00 


180 


Mondo Moiwo 


Gena Noglku — Paglaukane 


K 8,200.00 


181 


Kawage Kelly 


Gena Noglku — Paglaukane 


K 9,700.00 


182 


Mondo Kawagle 


Gena Noglku — Paglaukane 


Kl 0,000.00 


183 


Kulan Dombe 


Gena Noglku — Paglaukane 


K 8,100.00 


184 


Mun Kakin 


Gena Noglku — Paglaukane 


K 5,000.00 


185 


Gigimai Leo 


Gena Noglku — Paglaukane 


IC 8,000.00 


186 


Teine Leo 


Gena Noglku — Paglaukane 


K 6,300.00 


187 


Mogil Teine 


Gena Noglku — Paglaukane 


K 9,200.00 


188 


Kaima Dua 


Gena Noglku — Paglaukane 


K 8,900.00 


189 


Whagi Kaima 


Gena Noglku — Paglaukane 


IC 6,200.00 


190 


Kangua Dua 


Gena Noglku — Paglaukane 


K 7,300..00 


191 


Wau Kianuga 


Gena Noglku — Paglaukane 


K 5,800.00 


192 


Onguglo Armstrong 


Gena Noglku — Paglaukane 


IC10,000.00 


193 


Stanley Ambane 


Gena Noglku — Paglaukane 


K 7,400.00 


194 


John Rai 


Gena Noglku — Paglaukane 


K 9,720.00 


195 


Kawagle Denbi 


Gena Noglku — Paglaukane 


IC 8,400.00 


196 


Baglme Kianuga Jr 


Gena Noglku — Kamanegaumo 


IC 8,000.00 


197 


Wau Thomas 


Gena Noglku — Kamanegaumo 


IC10,000.00 


198 


Aina Par 


Gena Noglku — Kamanegaumo 


K 9,100.00 


199 


Peter Aina 


Gena Noglku — Kamanegaumo 


K 9,000.00 


200 


Samuel Aina 


Gena Noglku - Kamanegaumo 


K 6,300.00 


201 


Kawagle Kipa 


Gena Noglku — Kamanegaumo 
222 


K 8,900.00 



202 


Samuel Kipa 


Gena Noglku — Kamanegaumo 


K 9,000;00 


203 


Numambo Kawagle 


Gena Noglku — Kamanegaumo 


K 8,900.00 


204 


Wamuna Bomai 


Gena Noglku — Kamanegaumo 


Kl 0,000.00 


205 


Gigimai Kianugua 


Gena Noglku — Kamanegaumo 


Kl 0,250.00 


206 


Baglme Kianugua 


Gena Noglku — Kamanegaumo 


K 7,900.00 


207 


Raymond Aina 


Gena Noglku — Kamanegaumo 


K 8,100.00 


208 


Parak Pogo 


Gena Noglku — Kamanegaumo 


K 8,850.00 


209 


Bombar Pogo 


Gena Noglku — Kamanegaumo 


K 8,500.00 


210 


Gigimai Baglme 


Gena Noglku — Kamanegaumo 


K 8,450.00 


211 


Tony Bombar 


Gena Noglku — Kamanegaumo 


Kl 0,000.00 


212 


Wenabu Denbi 


Gena Noglku — Kamanegaumo 


K 5,000.00 


213 


Sinue Bundo 


Gena Noglku — Kamanegaumo 


K 2,500.00 


214 


Domyagl Piu 


Gena Noglku - Kamanegaumo 


K 5,500.00 


215 


Toi Koglkiya 


Gena Noglku — Kamanegaumo 


K 7,000.00 


216 


Koglkiwa Wamuna 


Gena Noglku — Kamanegaumo 


K 4,700.00 



223 



217 


Demane Kaiglo 


Gena Noglku — Kamanegaumo 


K 6,200.00 


218 


Demane Wanuwa 


Gena Noglku — Kamanegaumo 


K 7,200.00 


219 


Waruwe Waim 


Gena Noglku — Kamanegaumo 


K 4,000.00 


220 


Kaiangua Kimbe 


Gena Noglku - Kamanegaumo 


K 5,300.00 


221 


Waine Kagl 


Gena Noglku — Kamanegaumo 


IC 3,300.00 


222 


Apa Aglai 


Gena Noglku — Kamanegaumo 


K 7,500.00 


223 


Gabriel Aglai 


Gena Noglku — Kamanegaumo 


IC 7,000.00 


224 


Kombukun Alfred Yaglkama 


Gena Noglku — Kamanegaumo 


IC 9,000.00 


225 


Peter Aglua Leo 


Gena Noglku — Kamanegaumo 


K 9,000.00 


226 


Kunagil Kolkia 


Gena Noglku — Kamanegaumo 


IC20,000.00 



SUB TOTAL 



K232.450.00 



224 



GRAND TOTAL 



Kl,649,130.00 



225 



(b) Leo Kainam 

The claim is based upon a police raid on a village in the Gembogl District of Simbu province 
on the 15 th September 1995. The raid allegedly resulted in the death of one person, rape of two 
women, serious assault of 10 people and the willful destruction or theft of property belonging 
to 28 claimants. Thirty- seven plaintiffs altogether were listed in the Writ as suffering injury to 
the person or to property or both. Total loss of property claimed was PGK1 23,1 00.00. 

Due to the Solicitor General's failure to file a Defence on time, the 37 plaintiffs obtained 
default judgment in August 1996. After that the matter remained dormant for over 5 years 
until 2001. 

In May 2002 the Plaintiffs themselves set aside default judgment given in their favour in 1996. 
Application was made to amend Writ to include 77 new plaintiffs. Total damages rose to over 
PGK 2 million. Despite clear instructions from Simbu police given in 1996, the SG did not 
oppose any of these moves. In fact Mr. Mundua Kua of SG who was the action officer, 
consented to those court orders and signed on behalf of the SG. 

On 11/10/02 an order was signed off by Hagen Registry official as made by the National 
Court (yet to be verified from court file) for the State to pay PGK 1.7 million in full and final 
setdement. Zacchary Gelu as SG signed a certificate of judgment also dated 11/10/02 which 
was sent off to finance requesting payment of judgment orders. 



226 



A. Does the matter fall within the Terms of Reference? 

This matter falls under TOR No.s 1, 2, 3, 5, 8, (see attached copy of TOR) 
for the following reasons. Firstiy the amount claimed is over K1.7 million 
and was paid out between 2003 and 2007. It involves consent judgment 
entered into between a private lawyer, Joe Wai and a junior lawyer from 
Solicitor General (SG) named Mundua Kua. Earlier in the history of the 
case J. Wai had obtained default judgment because other SG lawyers failed 
to file a Defence on time. Under TOR 8 the State should never have been 
made liable for K1.7 million and in fact liability resulted from fraudulent 
collusion between J. Wai, Mundua Kua and possibly someone in the Mt. 
Hagen National Court Registry. 

B. Source of Information and Documentation 

This brief comprises of facts and findings from the files and records of; 

• The Solicitor-General's office (Most documents attached to this brief 

come from their file- SG 20/96) 

• The National Court Mount Hagen Registry. 

• The Department of Finance 

• Evidence given to COI by Mr. Zacharry Gelu 

• Evidence given to COI by Mr. Mundua Kua 

C. Relevant Facts 

The Matter 

1. The matter commenced by way of a writ of Summons WS 531 of 

1996 dated 03 rd June 1996 and served on the State on 04th June 1996 



227 



(Exhibit SG 1). There is no indication of date it was filed although there is a 
court stamp affixed to the document. The Writ claims damages for injuries 
suffered from an illegal police raid on a village in the Gembogl District of 
Simbu province on the 15 th September 1995. The raid allegedly resulted in the 
death of one person, rape of two women, serious assault of 10 people and the 
willful destruction or theft of property belonging to 28 claimants. Thirty- seven 
plaintiffs altogether were listed in the Writ as suffering injury to the person or 
to property or both. Total loss of property claimed was PGK123, 100.00. 

On the 16 th July 1996, Mr. Colin Makail, then lawyer of SG office, wrote to Joe 
Wai asking for a 60 day extension of time within which to file a Defence (see 
exhibit SG 2). On the same day Mr. Makail wrote to the Provincial Police 
commander of Simbu seeking instructions (refer exhibit SG 3). 

A Notice of Intention to defend (NOID) was filed by SG on the 02nd of 
August 1996, about a month after the 30 day time limit within which to file 
NOID (see exhibit SG 4). 

By a letter dated 06/08/96, Joe Wai replied to Mr. Makail's letter of 16/07/96 
noting the late filing of the NOID. He warned that if no Defence was filed by 
09 th August 1996 (3 days hence), he would seek default judgment. As noted 
from letter (Exhibit SG 5) the letter was received by SG on the 07 th August 
1996 and marked as urgent. Nothing seems to have been done in spite of that. 
Default judgment was obtained on 15 th August 1996. The Court order was 
signed by Lawrence Newell as Registrar, but note that the 



228 



document is headed "In the National Court of Justice at Kundiawa" 
(see exhibit SG 6). There is also no notation on the document to 
indicate whether it was filed and entered. It is difficult to tell where 
exacdy the court sat, if it sat at all, until the court file is perused. 

Almost two months after default judgment Simbu police faxed 22 pages of 
instructions clearly denying the allegations made against police of wholesale 
destruction to property and rape and unlawful killing of several people as 
claimed. John Nuglai a policeman who went on the raid gave a sworn 
statement attesting to the following [see exhibit SG 8(3)]. That he was the 
investigating officer of a complaint lodged by a cigarette company salesman 
who had been held up and his cargo of smokes as well as his company vehicle 
had been stolen. Acting on information obtained a search warrant and then 
led a team of regular as well as auxiliary police on a raid on the plaintiffs 
village. They found cigarettes and parts of the stolen vehicle which had been 
stripped and stored in various houses. He admitted to burning down of 4 
houses in which stolen car parts had been stored. He denied destroying other 
property on the scale alleged and the claims of women being raped or killed. 
Also faxed were District Court documents which showed that several of the 
plaintiffs had been charged by police and had subsequently pleaded guilty in 
the Court to charges of being in possession of stolen property [see exhibit 
8(21) to 8(25)]. 

Nothing was done by SG after receipt of those unambiguous instructions ie., 
if it were at all possible to seek to set aside default judgment even if it had 
been obtained seven weeks earlier. In fact the case lay dormant for over five 
years. 



229 



On 04/07/01 joe Wai wrote to Mr. John Kawi who was then Solicitor General 
seeking an early trial date for assessment of damages [refer exhibit SG 9]. 
Various letters passed between the two until an agreed Notice to set down for 
trial was signed by both of them. Joe Wai later sent a copy of the Notice to SG 
but again the document had not been filed, nor did it have any court stamp on 
it [refer exhibit SGI 2], This Notice set the matter down for trial "generally" 
and was received by SG on 29/10/01. 

No trial for assessment of damages was ever conducted. Instead Joe Wai wrote 
to SG by letter dated 12/03/02 seeking out of court settlement on a number of 
his matters including Leo Kainam. [refer exhibit SGI 3]. 

Two months later on 24/05/02 Wai tiled a Motion at the National Court 
seeking firstly to set aside default judgment given in favour of the plaintiffs 
15/08/96. Secondly it sought orders that the plaintiffs be given seven days to 
amend particulars of damages. The defendants to be given 60 days to file a 
Defence [refer exhibit SG 14]. 

In support of the above Motion Joe Wai filed an affidavit sworn on 20/05/02 
and filed on 24/05/02 [refer exhibit SG 15]. He alluded to his "discovery" of 
77 new plaintiffs who had suffered damage. At paragraph 5 and 6 he says that 
after he found these new plaintiffs he entered into discussions with Mundua 
Kua of SG office with a view to amend the particulars of damage to include 
the 77 new claimants. He said that on the 20 th of May 2002, after a month of 
talks, agreement was reached on a draft consent order. 



230 



Annexed to Joe Wal's affidavit as Annexure "A" is the draft consent order 
referred to above [see exhibit SG 16]. It bears the signature of Mundua Kua 
who signed on behalf of the SG on 20/05/02 and Joe Wai. Note that Joe Wai 
signed on the 24 th May 2002 which is the same day the Notice of Motion and 
Affidavit in support were filed. Also filed is an affidavit in support sworn by 
one of the new claimants a Mr. Paul Nirongo [refer exhibit SG 17]. Nirongo 
swears that he was one of 77 others who had delegated Leo Kainam to fly to 
Moresby and engage a Lawyer on their behalf. He said when Wai Lawyers 
approached them to get affidavits assessing damages they realized their names 
were not on the WS. He does not say how J. Wai knew to approach him in 
particular and when this approach was made. 

Leo Kainam also swore an affidavit in support [exhibit SGI 8]. Kainam swore 
that his tribe authorized him to engage a lawyer to claim against the State. 
When Mr. Wai visited them later to obtain affidavits proving damages ... "we 
told him there were 77 other members ...not included." Kainam also annexed 
to his affidavit a 'Consent Authority (undated, not filed) that lists 114 
Plaintiffs [refer exhibit SG 19]. All the plaintiffs signed or put their marks on 
the 25th and 26 th May 2002. Please note that that would postdate this 
affidavit (sworn 23/05/02 and filed 24/05/02) by several days. Please also 
note that the signatures beside the names are very similar in style and may 
have been signed by the same person. 

A court order was purportedly obtained by Wai lawyers on 04 th June 2002 in 
the terms of the draft judgment order referred to in paragraph 1 above. It was 
signed by someone on behalf of the 



231 



Registrar and bears the Court stamp of the Mt. Hagen National Court [refer 
exhibit SG 20]. 

16. On the 04 th of June 2002 a Notice of Amended Particulars mas filed [refer exhibit SG 21]. 
Document reads "pursuant to the Order of Court made on 4 June 2002, the particulars of 
damage endorsed on the Writ of Summons No. 531/96 was amended by inserting at the end of 
paragraph 10 the words and figures appearing in Schedule 1 annxed(sic) to this Notice." The 
Schedule lists names of 114 Claimants and the new damages. Note that no such Order has so 
far been sighted. 

17. A Minute dated 06 th June 2002 was sent by Mr. Buri Ovia who was the resident 
SG lawyer in Mt. Hagen to John Kumura who was the Acting SG at the time 
[refer exhibit SG 22] . He notified Kumura of the orders referred to above. 

18. Joe Wai next sent a letter dated 30 th June 2002 to SG, attention Mr. Mundua 

Kua enclosing 114 affidavits all dated 24/06/02 [refer exhibit SG 24]. They all 
attest to wrongful acts done by police to them. All the Affidavits are the same 
except for a few changes here and there. Two new women swear to being 
raped and two extra deaths. 

19. Belatedly John Kumura filed a Defence on the 19 th July 2002 [exhibit SG 25]. I 
say this because by this time Kumura would or should have been aware of the 
Minute sent to him by Mr. Ovia [exhibit SG 22] which advised of orders taken 
out on 04 th June 2002. 

20. Mr. Kumura then scribbled a note to Mundua Kua of all persons, instructing 
him to prepare a Deed of Setdement and write to Joe Wai 



232 



21. offering to settle the claim for PGK 150,000. Mr. Kua would have been 
well aware at this time that he had consented to orders that dramatically 
increased the State's liability way above PGK 150,000, so his following 
actions would seem to be almost farcical. Based on this instruction a 
letter was drafted (presumably by Mr. Kua) and signed by Zacchary 
Gelu who appears to have been SG at that time. The letter [exhibit SG 
27] dated 06 th August 2002 was then sent to Mr. Wai. 

22. Of course Joe Wai rejected the offer of PGK 150,000. He wrote back to SG 
on 18 th September 2002 [exhibit SG 28] reminding SG that according to the 
amended particulars of damages the damages had increased to 
PGK2,943,898.00. He made a counter offer of PGKi;700,000.00 in full and 
final setdement. 

23. Wai then filed Notice of Motion on 27/09/02 seeking orders that the State 
pay PGK 1.7 million [see exhibit SG 29]. The Notice was set for hearing on 
11 th November 2002 at 9.30 am at Mt. Hagen as it bears court seal of Mt. 
Hagen National Court. There is no record to show whether the SG appeared 
and whether the Motion was opposed. 

24. It seems as if the Motion was not opposed because on 11 th October 2002 an 
order was purportedly made [see exhibit SG 30] granting orders as sought in 
the Motion to pay PGK 1.7 million. The order was filed and entered on 
14/10/02 and stamped with the Mt. Hagen National Court seal. The person 
who signed bears the same signature as the one who signed orders setting 
aside default judgment and allowing for amendment of particulars of damages. 



233 



25. As further confirmation that the Motion was not challenged in court, a 
certificate of judgment dated 11 th October 2002 (date of motion) was signed 
by Mr. Zacchary Gelu on behalf of the State [see exhibit SG 31]. This 
certificate of judgment is signed off on behalf of the Registrar by the same 
person who signed the two preceding court orders. His title is Deputy 
Registrar. This fact alone is suspicious as according to Mr. Augerea, there are 
no Deputy Registrars in any center outside Waigani and never have been. 

26. Zacchary Gelu next wrote to Mr. Kambanei requesting payment of PGK 1.7 
million attaching court order of 11/10/02 and certificate of judgment dated 
same day [see exhibit SG 32], The first cheque number 714554 in the amount 
of PGK1 80,000 was issued on 12/03/03. Finance Department cashbook (see 
below) shows that the amount was paid in full. 

E. Evidence iven to the Commission 



(i) Mundua Kua 

Mr. Mundua Kua gave evidence first and said that yes he had carriage of the 
matter but he denied any wrong doing. Instead he said that Mr. Joe Wai and 
the principal Plaintiff, Leo Kainam and a third person called Paul Niriongo 
were regularly seen by him going and coming from Mr. Zacchary Gelu's office. 
He said in sworn evidence also that he had filed a Defence after the Plaintiffs 
had set aside their own default judgement and sought further Orders. Mr. Joe 
Wai had confronted him in his office and told him that ... "You have spoilt 



234 



In evidence, Mr. Kua denied ever appearing at Mt. Hagen during his time as 
lawyer with the SG office because as he explained, there was a lawyer based in 
the Hagen SG office. Most of the Court Orders were entered in the Mt. Hagen 
National Court. This explanation would to some degree tend to lend credence 
to Mr. Kua as he could not possibly have been in a position to influence 
matters far away from his normal work place which was Waigani. 

Zacharry Gelu 

In evidence Mr. Gelu flatly denied having any knowledge of this matter and lay 
the blame squarely on Mr. Mundua Kua. He denied seeing Mr. Wai, Mr. Leo 
Kainam or Mr. Paul Niriongo in connection with the Leo Kainam matter. He 
also denied signing consent Orders and said his signature was forged. 

National Court Registry 

After repeated follow up with the National Court Registry, the only 
documentation that was provided were new Affidavits filed after Default 
judgment was entered and the damages were re-adjusted to cater for the 77 
new plaintiffs. Other than that the file has not been found and so the Col 
cannot make any conclusive findings on whether there were any genuine Court 
Orders made to set aside the 1995 default judgment and to allow for the 
inclusion of 77 new claimants. 

Mr. Joe Wai. 

At the time of hearing Mr. Joe Wai had already died. His practice had since 
been taken over by his daughter, Maryanne Wai. Ms. Wai did not contact the 
Col to clear her fathers name, even though the matter was well publicized in 
the Newspaper (see attached clippings). There 



235 



is evidence on file that she managed to collect all outstanding amounts from 
the Finance department after her Fathers demise. 

PAYMENTS BY FINANCE 

As shown below full payment was made out of properly appropriated votes 207- 
which are for Court case payments and for payment of Arrears. The amount exceeds 
PGK 1.7 million, but that is explained by the fact that a cheque for PGK300,000 had 
been cancelled after it had been paid into the wrong lawyers Trust account, i.e., that of 
Gadens lawyers instead of Joe Wai lawyers. 



SCHEDULE OF PAYMENTS TO LEO KAINAM 













Schedule of payments n 


ladeto Leo Kainam: 




















COIFileNo.45 














GE/ILPOC Account 












Cheque NeOebits Credits 


Yearly 


le 


Drv 




Function Act 


Item Payee 


Details 


Ty 


Reference (Rec 


eipts) (Payments 


Total Pmtt 


1/29/2003 


890967 


207 


4201 


2107 


135Leokainam81130 


PymtolO/SC/Order 


CO 


710429 


180.000.00 




3/12/2003 


698275 


207 


4201 


4123 


135 Leo Kainam & 1130 


ReimbofCHONo:710 


CO 


714554 


180.000.00 




7/29/2003 


925303 


207 


4201 


2107 


135 Leo Kainam 81130 


Pmto/sc/orderWS#5 


CO 


728763 


:K>.000.00 


J90,000.00 


/30/2004 


19974 


207 


4201 


2107 


135 Leo Kainam & 1130 


0/SC/OWSNo.531of 


CO 


796532 


IOO.DOO.OC 




/30/2004 


114595 


207 


4201 


2107 


135 Leo Kainam & 1130 


P/Pmtlor O/SC/O 


CO 


800182 


190,000.00 


190,000.00 


5/27/2005 


1033361 


207 


4201 


2107 


135 Leo Kainam 


Replacement of Chq 


CO 


811735 


100,000.00 




6/7/2005 


1034873 


207 


4201 


2107 


135 Leo Kainam 


Pmtforo/sc/order 


CQ 


812724 


: 100,000.00 




3/23/2005 


1023643 


207 


4201 


2107 


135 Leo Kainam & 113o 


Pmtforo/scertior 


CQ 


806377 


150,000.00 




3I23/200S 


1023643 


207 


4201 


2107 


135 Leo Kainam <1130 


Pmtforo/scertior 


CO 


806377 


>00.000.00 




5/12/2005 


1032042 


207 


4201 


2107 


135 Leo KainamS 1130 


Replacement of Chq#B 


CO 


810154 


100.000.00 


>50,000.00 


7/4/2006 


1081043 


207 


4201 


2107 


135 Leo Kainam 8 1130 


0/SC/OrderPmt(WS 


CO 


839496 


100.000.00 




8/11/2006 


10863 7S 


207 


4201 


2107 


135 Leo Kainam 8113 


0/SSG 20/96 


CQ 


841921 


:«n,oo 
o.oo 


2330.000.00 


12/31/2006 


1106888 


207 


4201 


2107 


135 Leo KainamS 1130 


PmtC/OrderWSB31/9 


CQ 


855210 


100,000.00 


400,000.00 



D. Findings 



> The Solicitor General (SG) was negligent in not filing Notice of intention to defend 
within 30 days after service of Writ. 

y The SG was even more negligent in not opposing the move by Wai to increase the 
number of plaintiffs through the back door well after 6 years had expired making 
the case for the 77 new plaintiffs statutorily barred under the Fraud and Limitations 
Act. 



236 



> Alternatively, the SG was not able to oppose the motion to amend particulars of 
damage because of collusion by its own action officer, Mr. Mundua Kua. 

> Mir. Mundua Kua as a junior lawyer did not have the authority to agree to and sign 
consent judgment on behalf of the Solicitor general and the State. 

> The addition of 77 new plaintiffs was patently false. Where were they from 15 th 
September 1995 to 2002? This assertion is supported at the end where some 
Plaintiffs complained that Leo Kainam did not distribute the money fairly or at all. 

y Alternatively, the SG was not able to oppose the motion to amend particulars of 
damage because of collusion by the action officer of SG, Mr. Mundua Kua or Mr. 
Zacchary Gelu or both in colloboration. 

A There may have been assistance given to the perpetration of this bogus claim by an 
official in the Mt. Hagen Registry or by someone with access to the National 
Court stamp. 

COMPLIANCE ISSUES 

1) There was breach of section 61 of the Public Finance (Management) Act 
when Ministerial approval was not sought before Zacchary Gelu signed 
certificate of judgment. 

2) There is no section 5 Notice under the Claims by and against the State Act 
1 996, on file. This Writ was filed in the same Month that the Claims Act came 
into force, i.e., June 1996. 



237 



3) The addition of 77 new plaintiffs was done 7 years after the cause of action arose in 
September 1995. The new plaintiffs were added on in May 2002. This is not 
allowed by section 16 (1) of the Statute of Frauds and Limitations Act 1998. 

Recommendations 

1 . That Mundua Kua be referred to the Fraud squad for further investigations. 

2. That Mr. Zacchary Gelu also be referred to the Fraud Squad for further 
investigation. 

3. That recovery action is taken against the firm of Wai and Company lawyers 
after purported judgment is set aside as being fraudulent. 

4. Something be done to prevent such negligence by the Solicitor General's office 
in not filing NOID and Defence on time. Perhaps legislation can be passed to 
increase the time limitation of 90 days or three months within which to file 
Defence to 180 days or six months taking into account remote locations like 
Simbu province and the difficulty SG lawyers and the police have in taking 
instructions. 

5. The Solicitor General's office becomes more proactive in obtaining instructions 
from the Police in a timely manner. It is suggested that the Solicitor Generals 
office go straight to the Provincial Police Commanders for their Instructions as 
soon as a section 5 notice is served instead of dealing with the Police Head 
Quarters and its legal section. 



238 



6. That the National Court Registry tighten up on the security and use 
of National Court Stamps. Mr. Augerea made several 
recommendations in his evidence and these should be supported. 



TABLE OF DOCUMENTS TO BE TENDERED 



No 


Exhibit 


Description 


Comments 


1 


SGI 


WS 531/96 


No indication of date filed, but is dated 3/6/96 and was 
served on SG on 4/6/9 


2 


SG2 


SG Letter (16/7/96) 


Written by C. Makail to J. Wai asking for extension of 60 
days within which to file Defence. 


3 


SG3 


SG Letter (16/7/96) 


From C.Makail to PPC Simbu seeking instructions 


4 


SG4 


NOID 


Notice of Intention to Defend filed by SG on 2/8/96 


5 


SG5 


[.Wai Letter (6/8/96) 


To SG noted NOID and warned that if no Defence 
filed by 9/8/96 he would seek Default judgment. 


6 


SG6 


DEFAULT 
JUDGMENT 


Obtained by J.Wal on 15/08/96. Damages to be 
assessed. 


7 


SG7 


Letter (26/8/96) 


From Police lawyer to SG advising that he was in the 
process of obtaining instructions to defend case. 


8 


SG 8(1) to 
8(25) 


25 page Fax from 
PPC Simbu to SG 
sent on 10/10/96 


Various affidavits deny extent of damages claimed. Also 
contain District Court documents showing criminal 
charges laid against several plaintiffs (who were captured 
during the raid complained of), to which they pleaded 
guilty. 


9 


SG9 


J. Wai Letter to 


Refers to discussion between Wai And John 



239 







SG (4/7/01) 


Kawi (then SG) to obtain earliest possible trial date for 
assessment of damages. 


10 


SG10 


J.Wal Letter to SG 


Query whether matter should be listed for trial on 






(4/9/01) 


10/09/01 


11 


SG11 


Letter (08/1/01) 


From Assistant Registrar Hagen to Wai advising that 
both parties had to sign Notice to set down for Trial 
before matter could be placed on civil list. 


12 


SG12 


NOTICE TO SET 


On 29/10/01 SG received copy of Notice (undated, not 






DOWN FOR 


filed) to set down for trial 'generally'. 






TRIAL 




13 


SG13 


J Wai Letter to SG 


|. Wai asked SG to consider out of court setdement for a 






(12/03/02) 


number of his cases against the State including WS 531 of 
1996. 


14 


SG14 


Notice Of Motion 


Plaintiff sought orders that 1) Default Judgment obtained 






Filed on 24/05/02, 


on 15/08/96 be set aside, 2) Plaintiffs be given 7 days 
to file their amended particulars of damages. 


15 


SG15 


Affidavit in Support 


Wai alludes to the discovery of 77 new plaintiffs who had 






-J.Wal, sworn 


also suffered damages. Says entered into discussion with 






20/05/02and filed 


Mundua Kua of SG in order to amend particulars of 






24/05/02 


damages to include 77 new plaintiffs. 



240 



16 


SG16 


Draft 


ConsentReferred to above. Note that Mundua Kua signed as 






Orders 




Solicitor General. Note also that the date this was 
signed was on 24/05/02, the same date as J. Wal's 
Affidavit, the Notice of Motion and affidavits in 
support listed below. 


17 


SG17 


Affidavit 
Niriongo 
24/05/02 


of Paul 
dated 


One of the new Plaintiffs. 



18 


SG18 


Affidavit of 


Leo 


Affidavit in support of Motion. Kainam swore that his 






Kainam sworn 


on 


tribe authorized him to engage a lawyer to claim against 






23/05/02 and 


filed 


the State. Affidavit by several days. 






24/05/02 






19 


SG19 


Consent 
Authority 


and 


Annexed to Leo Kainam's Affidavit (above. 


20 


SG20 


Court Order 




Dated 4/6/02 and entered 5/6/02 in terms stated in 
the draft consent orders 


21 


SG21 


Notice of Amended 


Document reads "pursuant to the Order of Court made on 4 






Particulars of 




June 2002. ..etc". The Schedule lists names of 114 






Damage (Filed 




Claimants and the new damages claimed. 






4/6/02) 






22 


SG22 


Minute of 6/6/02 


Written by Mr. Buri Ovia, the resident SG lawyer in 










Hagen to John Kumura advising that 



241 









Orders had been granted in terms of the consent Orders. 


22 


SG23 


J. Wai Letter to SG 


Attention Mundua Kua, cover letter attaching 114 
Affidavits all dated 24/06/02, attest to the wrongful acts 
of the police raiding party. Two extra deaths and two 
more women swear to being raped. 



23 



SG 24 (1) 
TO 

24(114) 



114 AffidavitsReferred to above. The three page affidavits are all almost 

collated in two booksexacdy the same except for slight variations made here 
(No. 1 & 2) and there. 



24 SG 25 



DEFENCE filed onBy John Kumura (A/SG) even when he was fully aware 
19/07/02 that 'Consent' Orders had already been granted. 



25 SG 26 



Hand written note ofScribbled note by Kumura? To Mundua Kua instructing 
30/07/02 him to prepare Deed of Setdement and write to J.Wal 

offering to settie for Kl 50,000.00. 



26 SG 27 



SG Letter to J.Wal ofLetter signed by Z. Gelu offers to settie claim at Kl 
06/08/02 50,000.00 inclusive of all heads of damages, interest and 

cost. Action seems to be a sham, an attempt to make it 
look like efforts had been made to protect the interest of 
the State. 



27 SG 28 J. Wai letter to 



Rejects offer of K150, 000.00 and points out 



242 



SG of 18/09/02 



that new damages as amended total K2, 943, 898. 00 but 
is willing to settle at Kl ,700,000.00. 



28 SG 29 



Notice of MotionMotion 
filed 27/09/02 



seeking orders that the State pay Kl,700,000.00 
in full and final setdement. 



29 SG 30 



Court Order dated Court Order signed on behalf of the Registrar ordering 

ll/10/o:' State to pay KL700,000.00. Note, this is yet to be 

verified from the WS file. 



30 SG 31 



Certificate ofSigned by Deputy Registrar (same signature as 

Judgment filedabove on 11/10/02 and signed by Z. Gelu as A/SG on 

14/10/02 the same date 



31 SG 32 



Gelu letter to Cover letter signed by Gelu to Kambanei requesting 
Kambanei of payment of K1.7 million. Attached as supporting 

08/11/02 documents were Court Order of 14/10/02 and 

Certificate of Judgment dated 14/10/02. 



32 SG 33 



Letter by MaryanneM 
Wai to SG 



s Wai (Joe Wal's daughter?), wraps things up in this 
letter to SG advising of payments received. 



33 FD 34 



Cheque No. 714554 



Dated 12/03/03. First Cheque paid in amount of 
PGK1 80,000.00 



34 FD 35 



Cheque 722456 



Dated 30/05/03. Part payment of PGK1 00,000.00. 



243 











35 


FD36 


Cheque 728763 


Dated 29/07/03 for PGK30,000.00. 


36 


FD37 


Cheque 796532 


Dated 30/11/04 for PGK1 00,000.00 



37 


FD38 


Cheque 812724 


Dated 07/06/05 for PGK200,000.00 


38 


FD39 


Cheque 839496 


Dated 04/07/06 for PGK1 00,000.00 


39 


FD40 


Cheque 855210 


Dated 31/12/06 for PGK1 00,000.00 


40 


FD41 


Letter from Mileng 
Lawyers to SG 


Letter dated 02 September 2005 complains of Leo 
Kainam not distributing payments equitably. Alleged to 
have fraudulently collected cheques direcdy from 
Finance and kept all the proceeds. 


41 


FD42 


Finance cash book 
extract 


Extract of payments made to Leo Kainam 



APPENDIX "A" (LIST OF PLAINTIFFS) 





NAME 


DATE SWORN 


DATE FILED 


1 


Leo Kainam 


24/06/02 


25 / 06 / 02 


2 


Joseph Onguglo 


24 / 06 / 02 


25 / 06 / 02 


3 


Peter Kagl 


24 / 06 / 02 


25 / 06 / 02 • 


4 


John Gigmai 


24 / 06 / 02 


25 / 06 / 02 


5 


Josepha Karka 


24 / 06 / 02 


25 / 06 / 02 


6 


Tine Umba 


24 / 06 / 02 


25 /06 / 02 


7 


Bare James 


24 / 06 / 02 


25 /06 / 02 



244 



8 


Umba Gorua 


24 / 06 / 02 


25 / 06 / 02 


9 


Komsen Dru 


24 / 06 / 02 


25 / 06 / 02 


10 


Bare Mamba 


24 / 06 / 02 


25 / 06 / 02 


11 


Gendwena Michael 


24 / 06 / 02 


25 / 06 / 02 


12 


Andrias Danga 


24 / 06 / 02 


25 / 06 / 02 


13 


Aloise Dru 


24 / 06 / 02 


25 / 06 / 02 


14 


Kumo Gorua 


24 / 06 / 02 


25 / 06 / 02 


15 


Bare Maslai 


24 / 06 / 02 


25 / 06 / 02 


16 


Kugl Maria 


24 / 06 / 02 


25 / 06 / 02 


17 


Gande Takai 


24 / 06 / 02 


25 / 06 / 02 


18 


Philip Kom 


24 / 06 / 02 


25 / 06 / 02 


19 


Klepas Kumo 


24 / 06 / 02 


25 / 06 / 02 


20 


Onguglo Andekumo 


24 / 06 / 02 


25 / 06 / 02 


21 


Joseph Koi 


24 / 06 / 02 


25 / 06 / 02 


22 


Gumia Alphones 


24 / 06 / 02 


25 / 06 / 02 


23 


Bare Teine 


24 / 06 / 02 


25 / 06 / 02 


24 


William Siune 


24/06/02 


25 / 06 / 02 


25 


Peter Nime 


24 / 06 / 02 


25 / 06 / 02 


26 


Ignas Gorua 


24 / 06 / 02 


25 / 06 / 02 


27 


Bare Kukagl 


24/06/02 


25 / 06 / 02 


28 


Peter Gigmai 


24 / 06 / 02 


25 / 06 / 02 


29 


Peter Kaglmavi 


24 / 06 / 02 


25 / 06 / 02 


30 


Bonny Kaiglo 


24 / 06 / 02 


25 / 06 / 02 


31 


Sugma Yu 


24 / 06 / 02 


25 / 06 / 02 


32 


Philip Kom (snr) 


24 / 06 / 02 


25 / 06 / 02 


33 


John Wamuna 


24/06 / 02 


25 / 06 / 02 


34 


Marta Penda 


24 / 06 / 02 


25 / 06 / 02 


35 


William Siune Kutne 


24 / 06 / 02 


25 / 06 / 02 


36 


Kilen Swaire 


24 / 06 / 02 


25 / 06 / 02 


37 


Bare Alsinepa 


24 / 06 / 02 
245 


25 / 06 / 02 



38 


Kuange Dru 


24 / 06 / 02 


25 / 06 / 02 


39 


Kua Bolkon 


24 / 06 / 02 


25 / 06 / 02 


40 


Gende Klepas 


24/06 / 02 


25 / 06 / 02 


41 


Joseph Sogan 


24 / 06 / 02 


25 / 06 / 02 


42 


Mond Kolkia 


24 / 06 / 02 


25 / 06 / 02 


43 


Paul Masta 


24 / 06 / 02 


25 / 06 / 02 


44 


Gande Gumia 


24 / 06 / 02 


25 / 06 / 02 


45 


Kilen Warka 


24 / 06 / 02 


25 / 06 / 02 


46 


John Takai 


24 / 06 / 02 


25 / 06 / 02 


47 


Peter Tora 


24 / 06 / 02 


25 / 06 / 02 


48 


Philip Dru Komkuange 


24 / 06 / 02 


25 / 06 / 02 


49 


Moro Takai 


24 / 06 / 02 


25 / 06 / 02 


50 


Warka Kuglame 


24 / 06 / 02 


25 /06 / 02 


51 


Kmbugl Bare 


24 / 06 / 02 


25 / 06 / 02 


52 


Takai Peter 


24 / 06 / 02 


25 / 06 / 02 


53 


Kongo Kindagl 


24 / 06 / 02 


25 / 06 / 02 


54 


Onguglo Caspar 


24 / 06 / 02 


25 / 06 / 02 


55 


Marka Awi 


24 / 06 / 02 


25 / 06 / 02 


56 


Angai Bare 


24 / 06 / 02 


25 / 06 / 02 


57 


Yu Sugma Kuatowa 


24/06 / 02 


25 /. 06 / 02 


58 


Philip Sugma 


24 / 06 / 02 


25 / 06 / 02 


59 


John Mombo Tisa 


24 / 06 / 02 


25 / 06 / 02 


60 


Kugl Bau 


24 / 06 / 02 


25 / 06 / 02 


61 


John Kuno Konduagle 


24 / 06 / 02 


25 / 06 / 02 


62 


Awi Adrias 


24 / 06 / 02 


25 / 06 / 02 


63 


Dokor Andamago 


24 / 06 / 02 


25 / 06 / 02 


64 


Philip Kunma 


24 / 06 / 02 


25 / 06 / 02 


65 


Kembir Alphonse 


24 / 06 / 02 


25 / 06 / 02 


66 


Umba Ingogo 


24 / 06 / 02 


25 / 06 / 02 


67 


Degba Biri 


24 / 06 / 02 
246 


25 / 06 / 02 



68 


Dre Tasicia Simon 


24/06 / 02 


25 / 06 / 02 


69 


Kumo Tolai 


24 / 06 / 02 


25 / 06 / 02 


70 


Ambane Joseph 


24 / 06 / 02 


25 / 06 / 02 


71 


Polko Paglau 


24 / 06 / 02 


25 / 06 / 02 


72 


Awiamb Gaglu 


24 / 06 / 02 


25 / 06 / 02 


73 


Martha Plawa 


24 / 06 / 02 


25 /06 / 02 


74 


Linus Kuglame 


24 / 06 / 02 


25 / 06 / 02 


75 


Worn Waugla 


24 / 06 / 02 


25 / 06 / 02 


76 


Kumo Gigmai 


24 / 06 / 02 


25 / 06 / 02 


77 


Peter Kumuno 


24 / 06 / 02 


25 / 06 / 02 


78 


Maine Gugl 


24 / 06 / 02 


25 / 06 / 02 


79 


Gambugl Kindagl 


24 / 06 / 02 


25 / 06 / 02 


80 


Peter Madime 


24 / 06 / 02 


25 / 06 / 02 


81 


Oglam Kuglame 


24/06 / 02 


25 / 06 / 02 


82 


Kimde Aglai 


24 / 06 / 02 


25 / 06 / 02 


83 


Mondo Braun 


24 / 06 / 02 


25 / 06 / 02 


84 


Mary Ambane 


24/06 / 02 


25 / 06 / 02 


85 


Morris Onguglo 


24 / 06 / 02 


25 / 06 / 02 


86 


Rose Kamb 


24/06 / 02 


25 / 06 / 02 


87 


Angai Merawo 


24 / 06 / 02 


25 / 06 / 02 


88 


Dru Penda 


24 / 06 / 02 


25 / 06 / 02 


89 


Mond Lucas 


24 / 06 / 02 


25 / 06 / 02 


90 


Konam Gorua 


24 / 06 / 02 


25 / 06 / 02 


91 


Steven Noglai 


24 / 06 / 02 


25 / 06 / 02 


92 


Philip Gene 


24 / 06 / 02 


25 / 06 / 02 


93 


David Yama 


24 / 06 / 02 


25 / 06 / 02 


94 


Daka Waugla 


24 / 06 / 02 


25 / 06 / 02 


95 


Komson Kembra 


24 / 06 / 02 


25 / 06 / 02 


96 


Yuana Saidor 


24/06 / 02 


25 / 06 / 02 


97 


Korai Kainam 


24 / 06 / 02 
247 


25 / 06 / 02 



98 


Kilen Gagande 


24 / 06 / 02 


25 / 06 / 02 


99 


Emma Kombukim 


24 / 06 / 02 


25 / 06 / 02 


100 


Gambagl Kamb 


24 / 06 / 02 


25 / 06 / 02 


101 


Kama Nigl 


24 / 06 / 02 


25 / 06 / 02 


102 


Awi Dorme 


24 / 06 / 02 


25 / 06 / 02 


103 


Paul Onguglo 


24 / 06 / 02 


25 / 06 / 02 


104 


Baiya Kalpi 


24 / 06 / 02 


25 / 06 / 02 


105 


Enni Gande 


24 / 06 / 02 


25 / 06 / 02 


106 


Bundo Gende 


24 / 06 / 02 


25 / 06 / 02 


107 


Waugla Korai 


24 / 06 / 02 


25 / 06 / 02 


108 


Kutna Asue 


24 / 06 / 02 


25 / 06 / 02 


109 


Elina Gambugl 


24 / 06 / 02 


25 / 06 / 02 


110 


Mond Auno 


24 / 06 / 02 


25 / 06 / 02 


111 


Nilkutna Onguglo 


24 / 06 / 02 


25 / 06 / 02 


112 


San Dux 


24 / 06 / 02 


25 / 06 / 02 


113 


Parak Kama 


24 / 06 / 02 


25 / 06 / 02 


114 


Paul N Kuange 


24 / 06 / 02 


25 / 06 / 02 



(VJ A.ndeka Tepoka 

A. LAWYERS 

y For Plaintiffs: Simon Norum of Norum Lawyers 

> For Defendants: Office of Solicitor General & Attorney General 

1) Mr. Francis Damem as SG 

2) Mr. Anlus Iwais as lawyer having carriage of matter 

3) Mr. Michael Gene as Secretary & AG 

4) Mr. John Kumura as Acting SG & 

5) Mr.JohnKawias SG 



248 



B. SOURCE OF DOCUMENTS: 

> Department of Finance (DoF) 

> District Court Registry & 

> National Court Registry 

C. BACKGROUND 

1. This is a claim by a total of 130 individual complainants who through their 
Lawyer, Mr. Norum lodged their respective claims against the Defendants 
which were dealt with joindy. The Complainants alleged that on 30 th of July 
1991, the First Defendant and other Policemen went into their village called 
Kulimbu in the Baiyer River District, WHP and without any reason assaulted 
them and destroyed their properties such as houses, trade stores and even 
killed domestic animals. 

2. Following the raid, the Complainants then filed Court Proceedings: DC 33- 
167 of 1997 in the Mt Hagen District Court on or about 20 May 1997 
through Simon Norum Lawyers. 

3. It seems that the Complaints were then set down for hearing on 27 June 
1997, but due to the non-appearance by the Defendants Lawyers, Mr. Norum 
applied for leave to proceed with the hearing ex parte which the Court 
granted and adjourned to 15 July 1997 for hearing. 

4. The Court then proceeded to hear all the claims on 15 July 1997 and made a 
ruling on the same date in favour of all the Complainants allowing judgement 
on each of the claims in full as claimed. (D/C 5). 



249 



Except for the amount claimed by each Plaintiff, and the amount 
awarded as exemplary damages, which varied, the others Orders in 
each of the 130 claims are same. These Orders are: (DC 6 & 7) 

a) Judgment entered in favor of the Complainant in the sum 
claimed to be paid by the Second Defendant (State) 

b) Exemplary Damages at each respective amount claimed 

c) Interest at 8% from date of issuing of summons to the date of 
Judgment. (20/03/97-15/07/97) 

d) Costs of the Court proceedings to be taxed and 

e) Judgment sum, Exemplary Damages, Interest plus costs to be 

taxed and shall be paid by the State forthwith. 

See Schedule prepared by the Solicitor General's office for a list of all 
the claimants and their respective claims. (FD 13) 
The District Court also issued Certificates of Judgment at the same 
time the orders were entered. (DC 6 & 7) 

Altogether, the District Court has awarded a total sum of 
IC1, 424,496.40. This amount comprises of: IC943.281.00 being total 
principal judgement, K25,083.00 being total interest awarded at 8% 
and K456,281 being costs. 



LIST OF DOCUMENTS. 



NO. 


DATE 


DOCUMENT 


COMMENTS 


DC1 


20 March 1997 


Summons To A Person Upon 
Complainant in DC 


Filed by Simon Norum Lawyers in Mt 
Hagen 



250 







33 of 1997 




DC2 


20 March 1997 


Summons To A Person Upon 
Complaint in DC 34 of 1997 


Filed by Simon Norum Lawyers in Mt 
Hagen 


DC3 


14 July 1997 


Affidavit of Service 


Sworn by Joe Kenken and filed by Simon 
Norum Lawyers for service of Summons 
on the Second Defendant at the Solicitor 
General's office 


DC4 


27 June 1997 


DC Magistrate's Endorsements 


Handwritten endorsement by DC 
Magistrate Appa granting leave to 
Complainants to proceed with claims 
against the Defendants 


DC5 


15 July 1997 


DC Magistrate's published 
Decision 


Of Mr. Appa of hearing on 15 July 1997 
granting orders in favour of 
Complainants 


DC6 


15 July 1997 


Order 


Formal orders made 1 5 July 1 997 entered 
23 July 1997 in favor of Complainant for 
the sum of K10,000.00 in DC 33 of 1997 


DC7 


15 July 1997 


Order 


Formal Orders made 15 July 1997 
entered 23 July 1997 in favour of 
Complainant for the sum of Kl 0,000.00 
filed by Simon Norum 



251 



DC8 






Lawyers in DC 34 of 1997 


18 November 
1997 


Letter 


From Francis Damem Solicitor General 
to Finance Secretary enclosing copies of 
Orders of 15 July 1997 requesting 
cheque to be raised in settlement of the 
claims; 



DC9 


29 October 1997 


Notice of Appeal 


Filed by Solicitor General Francis 
Damem on behalf of State 


FD10 


9 February 1998 


Letter 


From Simon Norum to Secretary for 
Finance requesting cheque to be raised 
to Max Umbu Pili; 


FD11 


14 July 2000 


Letter 


From Michael Gene Secretary and 
Attorney General of Dept. of Justice & 
Attorney General requesting settlement 
of judgment debt; 


FD12 


26 July 2000 


Letter 


From John Kumura Acting Solicitor 
General to Secretary fot Finance 
advising he had no objection to cheque 
being paid to Max Umbu Pili 


FD13 




Schedule 


Prepared by the Solicitor General's 
Office setting out names of 



252 









Claimants and the amounts claimed by 
each claimant. 


FD14 


11 January 2002 


Letter 


From John Kawi Solicitor General to 
Max Umbu Pili enclosing cheque in the 
sum of K668,215.49 as full and final 
setdement of the judgment debt. 


FD15 


12 March 2002 


Letter 


To Simon Norum regarding Rote Rapura 
and 47 others o/s payments (annexure to 
an affidavit by Rote Rapura) 


FD16 


21 March 2002 


Letter 


From John Kawi Solicitor General to Mr. 
Yele Iamo Finance Secretary regarding 
payment of post judgment interests in 
the sum of K41 7,841. 49 


NC17 


20 December 2002 


Writ of Summons No. 1668 of 
2002 


Filed by Kunai & Co. Lawyers against 
Simon Norum and Max Pili 


NC18 


7 October 2003 


Order 


In OS 407 of 2003 made 7 October 2003 

entered 8 October 2003 in favour of 

Smith Alvi & 127 others for Finance to 

pay K41 7,841 .49 being the remaining 

balance in relation to judgment in 
DC 33-164 of 1997 



253 



FD19 


24 November 
2003 


Information 


Laid by Kandi Kinim against Max 
UmuPuli 




FD20 


27 May 2004 


Letter 


From Francis Kuvi Acting Solicitor 
General to Finance Secretary requesting 
payment of cheque to Paul Paraka 
Lawyers on behalf of Smith Alvi and 
127 ors 


FD21 


14 January 2005 


Letter 


From Mathew Damanu Detective Chief 
Inspector to Secretary for Finance 
requesting assistance in relation to 
documents regarding payments to Max 
Umbu Pili; 


NC22 


18 January 2006 


Ruling 


Ruling by Justice Davani in OS 7 of 
2003 for audit of Paul Paraka Trust 
Account 


NC23 


19 April 2006 


Ruling 


Ruling by Justice Davani in OS 407 of 
2006 


NC24 


25 July 2007 


Notice of Acquittal/Discharge 


By Justice David acquitting and 
discharge Max Puli Umbu from 
Misappropriating contrary to s.383a of 
the Criminal Code 


NC25 


7 December 


Decision 


By Justice Davani refusing 



254 





2007 




application by Rote Rapura for 
endorsement of Consent Orders 


NC26 


10 December 


Letter 


From RPNGC to Paul Paraka Lawyers 




2007 




re: authorization to collect cheque by 
Rote Rapura 


NC27 


12 August 2008 


Notice of Motion (Cross- 


Filed by Pius Kingal Lawyers for Rote 






Motion) 


Rapura seeking leave to be joined as a 
party in OS No. 407 of 2003 


FD28 




Schedule 


Of payments made between 2001 and 
2004 totaling KL1 26,790.49 



D. WITNESSES 



Following witnesses were called and gave evidence in respect of their 
involvement (if any) in this matter, they are:- 

a) EricKiso 

• He produced to the Commission District Court Files on this matter 

b) Thaddeus Kambanei (Former Secretary — Department of Finance) 

c) Francis Damem- (Former SG) and 

d) Simon Norum- (Acted for the Plaintiffs at the relevant time) 



E. FINDINGS 



1 . The Claim 



255 



The claim herein is for damages for loss of properties, domesticated animals 
and assault. 

The claimants are 130 people from a village called Kulimbu Village in the 
Baiyer River District in the Western Highlands Province, who claim that on 
30 th July 1991, several policemen based in Mt. Hagen raided their village for 
no reason resulting in the loss suffered. Consequendy they went to Simon 
Norum of Simon Norum and Co. Lawyers who then filed their claim in the 
District Court in Mt. Hagen on 14 th March 1997. 

The Mt. Hagen Police, through Chief Inspector Ambane, who was examined 
in Mt. Hagen, denied that there was a raid as claimed by the claimants and 
produced copies of statements he obtained from two people from the same 
village as the claimants. These two persons are: Jakina Sauli and Koke Wapuli. 
Koke Wapuli is closely related to Andeka Tepoka, the Principal Claimant in 
this matter. 

Contrary to Mr. Ambane's Statement, both these gentlemen in their statement 
essentially stated that, there was a raid in 1991 but the destruction was very 
little and estimated that only 20 houses were destroyed as opposed to the 
destruction caused by the villagers themselves in 1992 following the General 
Elections, which these two villagers believe was the true cause for the loss 
these 130 claimants claim they suffered and not as a result of the purported 
police raid. Unfortunately, this cannot be further investigated due to lack of 
time. 

Mr. Norum in his evidence says there was a Police raid, but it is hard to 
believe what he says because he himself did not personally attend 



256 



to the village to conduct his own investigations or have other villagers verify 
his clients' instructions. It is as a result of Mr. Norum's conduct that the 
District Court made the kind of Decision it did. 

2. Whether/not Claim is within time. 

Time limitation is not an issue in this matter. 

3 . Compliance with Claims By & Against the State Act. 

The claim herein arose in 1991 but the Claimants did not pursue it in Court until 
14 th March 1997. By this date, Section 21(2) of the current Act was already in 
operation. (20th February 1997). Upon the enactment of the current Act, which 
includes Section 21 (2), two situations were created in respect of a cause of 
action that accrued against the State as at the time of the enactment and the 
commencement date of this Act. 

The first situation relates to cases in which proceedings had already been 
instituted whilst the second relates to cases in which no proceedings had yet 
been issued. Based on this, the claimants in this matter would have had until 20 th 
August 1997 to give the required notice but instead of giving the Section 5 
Notice, they, through their lawyers filed proceedings in the District Court on 
14 th March 1997 which is premature act, which the State Lawyers could have 
relied on to have the proceedings dismissed for failure to comply with the Claims 
By and Against the State Act. 

4. District Court Procedures 

The manner in which this claim was brought about in the District Court was an 
unusual one. This was a matter that involved 1 30 claimants, who 



257 



instructed Simon Norum Lawyers to file proceedings in the District Court for 
damages for assault and loss of properties they claim, were destroyed as a result 
of a police raid in their village. Obviously, this was a representation action 
appropriate to be dealt with at the National Court, given the number of claimants 
and most importantly the fact that all these claims arose from the incident. 

Despite conceding to this, Mr. Norum gave evidence that he pursued the matter 
in the District Court only because he was instructed to. 

As a result of this attitude, the District Court also held the view that there was 
nothing wrong with hearing all these 1 30 claims individually, which if that was to 
be the case it would have taken days or weeks to properly consider all the 
evidence on their own, but as it turned out all 130 claims were heard on one day 
only (27 June 1997) and a month later the Court handed down only one decision, 
resulting in a total award of Kl,424,496.40. 

In addition, not only, did the District Court made such a huge award, but it even 
went further to issue Certificate of Judgements, a document usually issued by a 
claimant in the National Court to be signed by both the Registrar of the National 
Court and the Solicitor General. At nowhere in the District Court Act ot the Claims 
By and Against the State Act, does it empower a District Court Magistrate to issue 
the Certificate the was Mr. Appa did in this matter. 

Similarly, Mr. Appa had no powers to award costs on a solicitor client basis as he 
did. Award costs. 



258 



5. Costs 

One of the Orders of the District Court Judgement of 15 July was for costs and 
that the costs be taxed. (DC6 &DC7) In spite of the said order which was very 
clear, Mr. Norum presented his clients' legal fees and got an order for costs in 
the amount of K456,281.00. 

There was no application for taxation, nor was there any bill of costs in taxable 
form produced by neither Mr. Norum nor the District Court Registry. 

6. Interest 

Like costs, there was also an order for interest at 8% to be calculated from the 
date of filing of the proceedings (20.03.97) to the date of the Judgement 
(15.07.97) This was calculated at K25,083.00 and was included in the total 
amount payable (That is: K968,215.49). At no time at all, was there an order for 
Post Judgement Interest. 

However, as it turned out, there was an advice that the Claimants' were entided 
to Post Judgement Interest and the Finance Department has paid that into the 
Trust Account of Paraka Lawyers. 

7. Action/Steps taken to Defend Claim by SG & AG 

Solicitor General 

There is no evidence by . the State to show when the State Lawyers of the 
Office of the Solicitor General first became aware of this claim. 



259 



According to the published Decision (DC 5) of Mr. Appa, then the Principal 
Magistrate, the Solicitor General then, Mr. Damem, first became aware of this 
claim on 12 th May 1997 and wrote to the First Defendant, the Chief Inspector 
for instructions on 26 th May 1997, but received nothing. 

Consequendy, no appearances were made for the State and after numerous 
adjournments; the hearing proceeded ex parte to the detriment of the State. 

In his evidence, Mr. Damem stated that, this claim could not be defended at 
all due to the following: 

• Lack of instructions from the Police 

• Shortage of employed lawyers and 

• Lack of Notice of the dates scheduled for either Mention or Hearing of 

the matter. 



There was the opportunity to do things correctly when an 
was filed against the District Court Decision, but again for 
reasons, the Appeal, although there were good grounds, 
thrown out. 



Appeal 
the same 
it got 



Attorney General 

The Attorney General at the relevant time was Mr. Michael Gene, who did not 
feature much in the claim at the trial stage or the Appeal Stage, but when he did, 
that was in July of 2000, and instead of taking steps to benefit the State, he did 
the actual opposite, by writing to the 



260 



Secretary of Department of Treasury and Finance at that time, and requesting 
that payments in settlement of the claim be to Mr. Tepoka. 

Payment 

Following the various letters from the Office of the Solicitor General and the 
Attorney General to the Secretary Department of Finance on 18 November 
1997, 14 July 2000, 26 July 2000 and 21 March 2002 respectively, payments 
totalling K2,000,912.98 was paid by the Department of Finance with respect 
to this matter. 



261 



The Break-up of this payment is as follows: 



No. 


Amount 

(K) 


Payee 


Date of 
Payment 


Cheque No. 


Comments 


1 


968,215.49 


Max 

Umba 

Puli 


various 


various 


See FD 28 


2 


158,575.00 


18 other 

individual 

claimants 


various 


various 


See FD 28 


3 


456,281.00 


Simon 


28.08.01 & 


657325 & 


Costs component 






Norum 


30.12.01 


668857 


of the District Court 
Order of 15.07.97 


4 


417,841.49 


Paraka 


Not 


Not 


Post Judgement 






Lawyers 


known 


known 


Interest. See advice 






Trust Ac. 






of John Kawi (FD 16) 
Also see: National 
Court Order in OS 

407/03 (NCI 8) & letter 
by F.Kuvi (FD20) 



Mr. Norum who had acted for the Claimants in the District Court gave 
evidence that Kl 29,934.00 was paid into his trust account, which he had it 
there for a while waiting for the respective payees to attend to his office to get 
their payments, but when no one turned up, he refunded the money back to 
the State. (See Affidavit of Simon Norum-Tab 4) 



262 



Taking that into account the repayment made by Mr. Norum, the total paid 
out by Finance Department is now reduced to a total of Kl ,870,978.98. 

After this adjustment and assuming that the award of Kl ,424,496.49 was 
properly made, there would be an overpayment of K446,482.49. 

9. Related Proceedings 

There is currendy before the National Court, the proceedings, OS 407 of 
2003. This proceeding was filed by 127 people who were part of the 130 
claimants in the District Court Proceedings referred to herein. They filed this 
proceeding essentially claiming that they were not given their payments due 
to them under the District Court Order of 15 July 1997 and so filed these 
proceedings seeking orders to have Finance Department pay to them through 
their lawyers, namely, Paraka Lawyers, the amount of K417, 841.49 which 
Mr. Kawi had identified as Post Judgement Interest and the remaining 
balance in this matter. 

RECOMMENDATIONS 

1. Simon Norum 

According to Mr. Norum's own evidence (see Transcript of Proceeding- Tab 
5 & his affidavit sworn - 19 May 2009 - Tab 4) he was taking instructions 
from one of the claimant, namely, Max Umbu Puli, who practically did Mr. 
Norum's job in attending to taking other claimants' statements for their 
affidavits and after those affidavits were drafted, he was then tasked to take 
those to the individual 



263 



claimants to sign. This resulted in a lot of defects on the affidavits. Some of 
these defects were crucial but without any reasonable explanation, the District 
Court accepted those. 

For instance, almost all the affidavits were signed by inserting mere thumb 
prints and had notiiing else to explain why it was signed that way or whether 
the person signing knew what he or she was signing and agreed to what is 
contained therein. 

On examination of Mr. Norum on this issue, amongst other things, Mr. 
Norum essentially stated, it was the State's responsibility to object to such 
matters in Court, but since no one attended to represent the State, and raise 
the objection, it's the State's loss and his clients' gain. Such conduct does not 
only amount to unprofessionalism but also negligence in that as a lawyer and 
an officer of the Court, Mr. Norum's duty is first to the Courts and not his 
clients. 

He should therefore be referred to the Lawyers Statutory Committee and be 
warned. Otherwise he is setting a bad precedent. 

Jurisdiction. 

The provision on District Court Jurisdiction in the District Court A.ct should 
be amended to deal with Representation action. 

If the Court is to have jurisdiction, then the State must be represented at all 
times. Otherwise, it should be a matter for the National Court only. 



264 



3. Costs 

Obviously, The District Court Magistrate at the relevant time and Mr. Norum 
do not know the difference between party/party costs and solicitor/ client 
costs. A clear and simple distinction can be seen in the case of Baiyer River 
LLC v Robert Yandapu Kundi Maku [1980] PNGLR 430 

The Court held in that case that, "party '.party costs means, one party to pay another party 's 
costs, which is distinct from solicitor! client costs, which the client agrees with his Solicitor that 
he will pay his costs". 

The costs that were claimed by Mr. Norum and paid by the State even though 
the State was not liable to pay, was clearly solicitor/client costs and not 
party/party costs. If Mr. Norum had followed the District Court Costs Scale, 
the State would not have been made liable to pay what has been paid. In fact, 
his clients were liable for the costs of K456,281.49. Mr. Norum has obviously 
received what he was entitled to and sued to recover the amount paid to him 
as costs. 

4. Post Judgment Interest. (K417,841.49) 

As this is being currently contested in court, it is recommended that State join 
as a party in the Court Proceedings OS 407 of 2006, if it has not already done 
so and apply for the money to be paid back to Finance, as the money was 
wrongly paid out in the first place. 



265 



Lynette Malu 



A. Parties 



i. For the State 

(a) Police 

(b) Attorney General 

ii. For the Claimant: 

(a) Forty nine (48) villagers of a village at the outskirt of the Kagau 
Township of Southern Highlands Province 

(b) JB Nanei & Co. Lawyers 

(c) Gamoga Nouairi Lawyers & Associates 

iii. Others (if any) 

None 

Matter 

• Police raid 

• The claimant claimed for damages allegedly suffered as a result of that raid. 

• A Writ of Summons No. 662 of 1995 was filed with the National Court in Mt 

Hagen 

• The State failed to file defence against the litigation hence a default judgement 

was obtained. 

• A Deed of Release was signed on 27 November 2002 for final consideration of 

K4.5 million. 



266 



K3.88 million was paid by Department of Finance. 

Matter was referred to Police for investigations but it is not clear what 

has come about from the Police investigations. 

Recommended Findings 



Two (2) separate Writ of Summons were filed for this claim. Some of the 

claimants in all three court proceedings are the same persons. Clearly an act to 

defraud the State. 

Claimant's initial Quantified Claim propose in 1997 was for Kl, 094,762.99 

but revised it up to K4.5 million in 2002. 

No trial of assessment of damages was instituted for this claim 

Six payments totalling K2.7 million were made from the Trust Fund Suspense 

Account 
Fraud 

No proper assessment of damages. Matter did not warrant settlement at all 



D. Terms of Reference 

Attached herewith is the copy of the Terms of Reference. This is a case which falls 
within the terms of the reference of this inquiry. The relevant and applicable terms 
of references in respect of this case are Terms of Reference No.s'1 (i,n,vi,vii,i), 2, 3, 7, 8, 9 
&10. 



E. Documents and investigations conducted at: 

• Solicitor-General (SG) 

• Department of Finance (NQ 

• Other Sources relevant this case (OD) 

267 



F. Brief facts/ Evidence 

1. On 22 September 1990, it is alleged that a faction of Mendi Police Force conducted 
raids in and around Wabi Sumi and Apote villages at the outskirts of the Kagua Erave 
Electorate of Southern Highlands Province. The raid was conducted in an attempt to 
apprehend suspects involved in alleged theft of 100 bags of dried coffee. 

2. The consequence of the Police action resulted in a number of plaintiffs allegedly 
having suffered damages, loss of properties and suffered personal injuries. Annexure 
'1-DF' is copy of letter dated 28 November 2002 from Solicitor General, Zacchary 
Gelu to the Secretary for Department of Finance, Thaddeus Kambanei highlighting 
this matter. 

3. Three National Court proceedings were instituted against the Police and the State in 
respect of the Police raids conducted on 22 September 1990. This is one of the claims 
by 49 plaintiffs in which Lynette Malu was the principal plaintiff. The other two 
proceedings is one by Benny Balepa Malu (individual claim) and one by Yakoa Pape 
for and on behalf other persons. 

4. A Writ of Summons No. 662 of 1995 was allegedly filed by JB Nanei & Co. Lawyers 
on 4 August 1995 with the National Court at Waigani. Annexure '2-SG' is the copy of 
the Writ obtained from the Solicitor General file and the following parties were 
mentioned: 

Plaintiffs: Lynette Malu and 48 Others. 

First Defendant: The Police Commissioner. Second 
Defendant: The State. 



268 



5. On 17 February 1997 JB Nanei & Co. Lawyers wrote to the Solicitor General 
proposing to settle for Kl, 094,762.99 inclusive of interest and cost. Annexure '3-SG' 
is the copy of the subject fax. 

6. On 14 March 1997 JB Nanei & Co. Lawyers followed up with the Solicitor General 
on the proposal. Annexure '4-SG is the copy of the faxed notice. 

7. On 29 December 1997 David Keta Lawyers acting for the plaintiffs on Writ of 
Summon No. 201 of 1995 wrote to the Office of the Solicitor General alleging that 
the Writ of Summon No. 662 of 1995 is a duplicate to Writ of Summon No. 201 of 
1995 wherein the plaintiffs in both Writs were the same and arising from the same 
cause of action. Annexure '5-SG is the copy of the subject letter obtained. 

8. On 30 December 1997 David Keta Lawyers wrote to the Registrar of the National 
Court alleging the same issues as those raised in the letter to Solicitor General 
mentioned in paragraph 7 above. Annexure '6-SG is the copy of the subject letter. 

9. Annexure 7-OD' is the copy of W.S. No. 201 of 1995 purportedly filed by Ray Vaea 
Lawyers on 20 March 1995 with the National Court at Waigani in which a total of 
K688,075.00 was claimed for damages. Note that copy of this Writ was obtained 
from the COI file of Yakoa Pape & 48 Ors v the State. 

10. Also obtained from the COI file of Yakoa Pape & 48 Ors v the State Note is the 
copy of default judgement entered on 31 July 1995 on W.S. No. 201 of 1995. 
Annexure '8-OD' is the copy of the default judgement. 



269 



1 1 . Also alleged in David Keta Lawyers' letters identified in paragraphs 7 and 8 above is 
W.S. No. 266 of 91, which also aroused from the same cause of action. The National 
Court decided in favour of the plaintiff, Benny Balepa for total damages awarded at 
K35,008.00 on 22 September 1995 in spite of a quantified claim of K566,515.50 being 
submitted by the plaintiff. Annexure '9-SG' is the copy of the Court decision on this 
Writ. 

12. Note that Mr. Balepa is also mentioned as one of the plaintiffs on this claim's Writ of 
Summon No. 662 of 1995 and hence constitutes a duplicate- claim. Mr. Balepa is also 
allegedly married to Lynette Malu, the principal plaintiff on this claim. 

13. On 3 August 1998, David Keta Lawyers again wrote to the Office of Solicitor 
General reiterating the anomalies involved in the Writs mentioned in the above. It is 
also alleged that the State had failed to file defence against these Writs resulting to 
default judgement being entered. Annexure '10-SG is the copy of the subject letter. 

14. On 26 October 1999, Mr. Balepa being alleged as the authorised spokesperson for the 
plaintiffs of the claim (W.S No. 662 of 1995) wrote to the then Solicitor General 
disdaiming the allegation made by David Keta Lawyers and the W.S. No. 201 of 1995 
was alleged as duplicate to W.S No. 

. 662 of 1995. Mr. Balepa also claimed that W.S. No. 201 of 1995 was filed subsequent to 
their Writ (W.S 662/95). Annexure '11-SG' is the copy of the subject letter. 

15. Note that Mr. Balepa's letter mentioned in paragraph 11 above only reaffirms the fact 
that W.S. No. 201 of 1995 and the W.S. No. 662 of 1995 are for a duplicated claim as 
alleged by David Keta Lawyers. 



270 



16. Mr. Balepa's claim of the W.S. No. 662 of 1995 being filed before W.S. No. 201 of 
1995 appears to be in contrary to the Court's file number allocation, which are 
usually allocated in a sequential order. As such W.S. No 201 of 1995 would have filed 
before W.S. 662 of 1995. This is confirmed by the fact that W.S. 662 of 1995 as 
mentioned in paragraph 4 was filed on 4 August 1995, whereas W.S. No 201 of 1995 
was on 20 March 1995. 

17. Significant reference should be made to Mr. Balepa's letter of grievance to David 
Keta Lawyers dated 31 October 1996 which appears to be a much earlier exchange 
of correspondences involving the W.S. No. 201 of 1995 and W.S. No. 662 of 1995. 
In this letter Mr. Balepa clearly highlights the following issues: 

Mr. Balepa had instituted W.S. No. 662 of 1 995 on 4 August 1 995 
Mr. Balepa had instituted W.S. No. 266 of 1991 

• W.S. No. 201 of 1995 was a duplication of all the claims in relation to the raid 
Annexure '12-SG' is the copy of this letter. 

18. On 27 November 2002 a Deed of Release was allegedly signed in which a 
consideration of K4.5 million was offered for settlement, which is purportedly 
inclusive of interest and costs. Annexure '13-DF' is the copy of the Deed of Release. 

19. The parties involved in the signing of the Deed of Release are as follows: 

• Releasor - Lynette Malu being the principal representative of the 49 

plaintiffs 

• Releasee — Zacchary Gelu being the Solicitor General 

20. Note that the copy of the Deed of Release was not noted on the Solicitor General as 
expected. 



271 



21. The consideration of the Deed of Release signed is K3.4 million more than the initial 
Quantified Claim of Kl,094,762.99 being proposed by claimants first lawyer, JB Nanei 
& Co. Lawyers to the Solicitor General on 5 February 1997 as verified in paragraph 5. 

22. On 28 November 2002 the then Solicitor General, Zacchary Gelu wrote to the 
Secretary for Department of Finance, Thaddeus Kambanei advising of the 
circumstances in which the quantum assessment in respect of the State liability was 
derived. Note that the wording of letter is similar to that of the Deed of Release. 
Annexure '1-DF' is the copy of the subject letter. 

23. The revised total losses allegedly claimed by the 49 plaintiffs in comparison the initial 
agreed Quantified Claim by Solicitor General in 1997 are particularized as follows: 



(a) Actual Loss Suffered 

(b Damages 

(ci) Economic Loss 

(d) Interest 

(e) Costs 
Total 



IC598/732.12 

K571, 704.92 

K3,426,323.00 

K2,597,l 04.96 

K220.000.00 

K7.413.865.00 



24. It appears that the claimants' revised Quantified Claim might have being influenced by 
the claimants' new lawyers, Nouairi Lawyers & Associates. Annexure '14-SG' is the 
copy of Nouairi Lawyers' letter dated 29 January 2002 addressed to the Attorney 
General advising their claimants revised Quantified Claim as highlighted in paragraph 
23 above. 

25. On 15 April 2003 the then Secretary and Attorney General, Francis Damem wrote to 
the Secretary for Department of Finance advising stop payment of 



272 



a cheque made in respect to this case. Annexure '15-DF' is the copy of this advice. 



26. On 20 May 2003 Mr. Damem again wrote to the Secretary for Department of Finance 

advising having not noted any anomaly to this claim and advised setdement. 
Annexure '16-DF' is the copy of this advice. 

27. Finance Department made the following payment for which the Commission has 

abstracted from the electronic Department of Finance Cash Book listings provided: 



Date 


No 


Ace 


Progrm 


Act 


Item 


Payee 


Details 


Ty 


Ref# 


Payments 


17/2/2003 


893426 


207 


4201 


4123 


135 


Lynette Malu 
&48 


Pymt for O/S Deed 

of 


CQ 


712255 


100,000.00 


20/3/2003 


899882 


207 


4201 


4123 


135 


Lynette Malu 
&48 


Pmt for O/S BEDT 
SG3 


CQ 


715408 


100,000.00 


4/4/2003 


902946 


207 


4201 


4123 


135 


Lynette Malu 
&48 


Being pmt o/s debtS 


CQ 


716801 


200,000.00 


20/9/2003 


935450 


207 


4201 


4123 


135 


Lynette Malu 
&48 


O/S Debt SG3.4.787 
( 


CQ 


733833 


400,000.00 


31/10/2003 


943734 


460 


31 








Lynette Malu 
&48 


O/S DOR Claim 
SG3.4. 


CQ 


738386 


100,000.00 


17/11/2003 


946046 


207 


4201 


4123 


135 


Lynette Malu 
&48 


Payment for O/S 
DOR 


CQ 


739743 


80,000.00 


6/2/2004 


962379 


207 


4201 


2107 


135 


Lynette Malu 
&48 


P/pmt. o/s DOR 
claim 


CQ 


768312 


200,000.00 


2/4/2004 


972866 


460 


31 








Lynette Malu 
&48 


Pmt o/s DOR claim 

P/ 


CQ 


774340 


300,000.00 


2/4/2004 


972866 


460 


31 








Lynette Malu 
&48 


Pmt o/s DOR claim 

P/ 


CQ 


774340 


300,000.00 



273 















O 










10/8/2004 


994719 


207 


4201 


2107 


135 


Lynette Malu 
&48 


Being pmt for o/s 
DO 


CQ 


786708 


ioo.oooeP- 1 


27/8/2004 


997961 


460 


31 








Lynette Malu 
&48 


Pmt for o/s DORClai 


CQ 


788408 


500,000.00 


27/8/2004 


997961 


460 


31 








Lynette Malu 
&48 


Pmt for o/s DOR 
Clai 


CQ 


788408 


500,000.00 ~ 


17-09-2004 


1255 


460 


31 








Lynette Malu 
&48 


P/pmt for o/s DOR 
cl 


CQ 


790470 


1,000,000.00" A 

1 



Total 3,880,000.00 

28. Note that the Department of Finance made thirteen (13) separate payment to this 
claim between February 2003 to September 2004, totalling to K3.88.million. Of these 
13 payments, six (6) payments totalling K2.7 million appeared to have been made out 
from the Trust Fund Suspense Account, which is considered to be no illegally 
available funds. 

29. Annexure '17-DF' is the only payment voucher noted on the Department of Finance 
file reviewed despite a 13 payments being made. The payment relates to cheque ref# 
738386, which also appears to be one of the payments being made out of the Trust 
Fund Suspense Account based on the Budget Account Code ref# 4601 - 31, the 
budget account code reference of Trust Fund Suspense Account. 



30. On 18 February 2005 Director of National Fraud and Anit-Corruption Division 
(NFACD), Awan Sete wrote to the office of the Solicitor General advising their 
finding into the alleged fraud by Benny Balepa Malu and Lynette Malu. The findings 
revealed Mr. Balepa's involvement in W.S. No. 266 of 1991 and W.S. No. 662 of 1995 
as stated above which may amount to fraud. Annexure '18-SG' is copy of this letter. 



31. Note that the letter by Director of NFACD note paragraph 29 was signed by 
Detective Inspector of NFACD, Timothy Gitua whose signature has been 
confirmed in annexure '19-SG'. 

32. In evidence, Mr Nanei confirmed that he had acted for Benny Balepa in the earlier 
proceedings instituted by Benny Balepa himself. He also acted for Benny Balepa, 
Lynnette Malu & Others in the proceedings this time instituted by Lynette Malu. 

33. Benny Balepa also appeared before the Commission and gave evidence confirming 
that he was also a party to the Lynette Malu proceedings. 

34. In an affidavit filed by Lynette Malu in a separate proceedings (appears to be 
currently on foot), Lynnette Malu deposes to persons who have benefitted which 
included a church and persons not even parties to the proceedings. 

35. This is a duplication of proceedings and may amount to fraud. The amount settled 
was far in excess of what the Lynette Malu claimed in the Statement of Claim. 
Furthermore, the amounts awarded in the two proceedings (Benny Balepa & Yakoa 
Pape) which went before the National Court on hearing of damages were less 
compared to the settlement in Lynette Malu. In the case of Benny Balepa (full trial), 
the National Court awarded approximately K40, 000.00 whilst Yakoa Pape & 
Others, the National Court awarded approximately K200, 000.00. 

36. Messrs Francis Damem and Gamoga Jack Nouairi were invited to appear and give 
evidence but failed to attend. Mr Nouairi through his daughter and another person 
advised that he was not feeling well and also needed to arrange for some other 
persons to also come forward with him to give evidence. 



275 



37. Police have already formed an opinion in regards to this claim as such investigations 
should continue and appropriate persons involved in this matter should be called to 
answer in respect of their involvement. 

G. Findings: 

38. W.S. No. 201 of 1995 and W.S. No. 662 of 1995 are duplicated claims arising from 
the same cause of action. 

39. The matter appears to be a fraud and as such be referred to Police for further 
investigations. In this case, Police have conducted their investigations it is not of clear 
of the current status. Police need to continue with their investigations and persons 
involved should be brought in for further questioning. 

E. Recommendations 

39. Matter be referred to Police for further investigations. 

40. Attorney General take appropriate action to file for recovery against the claimants. 
Index of Relevant Documents 

1- DF - Copy of the letter from Solicitor General to Secretary 

for Department of Finance dated 28 November 2002 

2- SG - Copy of Writ of Summon No. 662 of 1 995 

3- SG - Copy of fax dated 17 February 1997 from JB Nanei & 

Co. Lawyers to Solicitor General re Quantified Claim 



276 



4- SG - Copy of fax dated 14 Match 1997 from JB Nanei & 

Co. Lawyers to Solicitor General. 

5- SG - Copy of letter dated 29 December 1997 David Keta 

Lawyers to Solicitor General 

6- SG - Copy of letter dated 29 December 1997 David Keta 

Lawyers to Registrar of National Court 

7- OD - Copy of Writ of Summon No. 201 of 1 995 

8- OD - Copy of Default Judgement on Writ of Summon No. 

201 of 1995 

9- SG - Copy of National Court decision on Writ of Summon 

No. 226 of 1991 

10- SG - Copy of letter dated 3 August 1998 by David Keta 

Lawyers to Solicitor General 
1 1 - SG - Copy of letter dated 26 October 1 999 by Benny Balepa 

to Solicitor General 

12- SG - Copy of letter dated 31 October 1996 by Benny Balepa 

to David Keta 

13- DF - Copy of the Deed of Release 

14- SG - Copy of letter dated 29 January 2002 from Nouairi 

Lawyers to Attorney General re Quantified Claim 

15- DF - Copy of letter dated 15 April 2003 from Attorney 

General to Secretary of Department of Finance 

16- DF - Copy of letter dated 20 May 2003 from Attorney 

General to Secretary of Department of Finance 

17- DF - Copy of payment voucher 

18- SG - Copy of letter dated 18 February 2005 from Director 

of National Fraud & Anti-Corruption' Division to Solicitor 
General 



277 



Copy of letter dated 15 December 2005 from Det. Inspector 
of National Fraud & Anti-Corruption Division to Solicitor 
General 



278 



Simon Wapo 

PARTIES: 

(i) For the State: 

1. Royal Papua New Guinea Constabulary (£RPNGC) 

2. Department of Justice and Attorney General ('DJAG) 

3. Department of Finance ('DoF') 

(ii) Claimant: 

(a) Simon Wapo, Peter Mogia, James Kaupa, Bob Nilkama, John Era, Ana 
Era, Anges Wegna, David Sul, Kaupa Nilkama, Jonathan Wall, Peter Kaupa, 
John Nime, Paul Kawage, Paul Gene, David Mune, Dickson Mika, Leslie 
Kikmai, Sipike Wale, Sul Nilkama, JoemKona, Konda Kinde, Gene Nime, 
Nonne Wale Kaupa, Thomas Kaugl, Angra Siune and Ambia Kera Nime 

NATURE OF CLAIM: 

There was an alleged Police raid conducted in Gumin Village, Kundiawa, 
Simbu Province resulting in damages and losses to the claimants' cash, food 
crops, houses, trade stores and other properties. 

The State was purportedly ordered by the National Court to pay the claimants 
K4 million in general damages, exemplary damages, costs and interest. 



279 



C. DOES THE MATTER FALL WITHIN THE TERMS OF REFERENCE 



1. The Solicitor General purportedly issued a letter dated 21 March 2003 to the 
Secretary for Finance to draw a cheque in the sum of K4 million in favour of a 
Simon Wapo. This was based on a purported Certificate of Judgement dated 
28 February 2003 and purported Court Order made on 28 October 2002 and 
entered on 28 February 2003 in respect of an alleged illegal Police raid 
conducted on 8 June 2000 in Gumin Village, Kundiawa, Simbu Province. 

2. The Department of Finance issued 12 cheques between 24 September 2004 
and 23 December 2005 totaling KC3,860,000.00, falling within the period 
under inquiry 2000 to 1 st July 2006. 



5 vy, i , 



In the circumstances, this matter falls within Terms of Reference No. 1, 6, 7, 
8, 9,11,13 and 14. 



D. SOURCES OF INFORMATION AND DOCUMENTATION 

4. The brief comprises information obtained from all persons considered by the 
Commission as having an interest in the inquiry into this matter, in particular- 



National Court Registry - 

(i) original Court file referenced WS No. 172 of 2000 
i. original Court file referenced CR 136 of 2007 - Boas Hembehi 

ii. Evidence of Ian Augerea, Registrar 

b. Department of Justice & Attorney General - 

280 



Evidence of - 

Hitelai Kiele-Polume, former Acting Solicitor General Zacchary Gelu, former 

Solicitor General 

a. Department of Finance — 
(i) Payment vouchers 
(ii) Evidence of - 

o Jacob Yafai, former First Assistant Secretary, Public 
Accounts Division o Boas Hembehi, Expenditure 
Controller (under Suspension) 

b. Royal PNG Constabulary — 

1. Court file Brief- Police vjohn Vailala, Boas Hembehi & Jacob 
Yafai 

6. The relevant transcripts of proceedings are provided with this Brief. 

7. The critical evidence given by each of these witnesses is discussed where 
relevant in the course of the findings (F) of this Brief. 



281 



E. CHRONOLOGY OF EVENTS 

2000 

1 . On 8 June 2000, Police allegedly conducted an illegal raid on Gumin Village, 

Kundiawa, Simbu Province. 

2. Simon Wapo & 25 others purportedly filed WS No. 172 of 2000. 

2003 

3. On 28 February 2003, purported Court Order made in WS No. 172 of 2000 
on 28 October 2002 was entered. 

4. On 28 February 2003, a purported Certificate of Judgement was certified by 
the Registrar of the National Court and the Solicitor General. 

5. By a purported letter dated 21 March 2003 to Secretary for Finance, the 
Solicitor General, Zacchary Gelu, requested a cheque in the sum of K4 million 
be drawn in favour of Simon Wapo pursuant the purported Certificate of 
Judgement dated 28 February 2003 and purported Court Order entered on 28 
February 2003. 

2004 

6. On 18 August 2004, a Simon Wapo appointed a Donald Lunen under a 
Memorandum of Agreement to pursue payment of K4 million from the 
Department of Finance on behalf of the claimants for a fee of K1.5 million 
upon receipt of said payment. 

7. By letter dated 24 September 2004 to the Manager, BSP Ltd, Joseph Yagi of 
Yagi Lawyers identified Simon Wapo and requested an account to be opened 
in his name. 



282 



On 27 September 2004, a Margoni Wamanimbo, Manager, Police Association 
Credit Fund Ltd and Thomas Taian, lawyer, Boroko Police Station declared 
themselves as acceptable referees for Simon Wapo. 

By letter dated 1 October 2004 to the Manager, BSP Ltd (Waigani), Jacob 
Yafai, First Assistant Secretary, Public Accounts Division, DoF, requested 
DoF cheque (# 791791) payment of IC500,000.00 into the account of Simon 
Wapo purportedly as part-payment of K4 million awarded by National Court. 

On 5 October 2004, a Simon Wapo on behalf of 25 others executed a Trust 
Deed effectively indemnifying BSP Ltd from any claims brought against the 
bank as a result of any dispute between the parties. The 25 others identified 
were: Peter Mogia, James Kaupa, Bob Nilkama, John Era, Ana Era, Anges 
Wegna, David Sul, Kaupa Nilkama, Jonathan Wall, Peter Kaupa, John Nime, 
Paul Kawage, Paul Gene, David Mune, Dickson Mika, Leslie Kikmai, Sipike 
Wale, Sul Nilkama, Joem Kona, Konda Kinde, Gene Nime, Nonne Wale 
Kaupa, Thomas Kaugl, Angra Siune and Ambia Kera Nime. 

On 6 October 2004, BSP Ltd opened "Simon Wapo Trust Deed Account". 

2005 

By letter dated 25 March 2005 to the Manager, BSP Ltd (Waigani), a Mary 
Martin, Financial Controller, DoF requested DoF cheque payment of 
K350,000.00 into the account of Simon Wapo purportedly as part-payment of 
K4 million awarded by National Court. 2008 



283 



13. By letter dated 2008 to the Commission, Samuel Ikiso, Deputy Registrar, 
National Court confirmed that WS No. 172 of 2000 is an existing Court file 

that - 

(a) is registered at Lae, not Waigani; 

(b) involves completely different parties, Nadlam Investment Ltd v Sealand 

Pacific Ltd; and 

(c) concerns a completely unrelated claim altogether. 

14. By letter dated 6 October 2008 to the Commission, BSP Ltd r\ 
produced its records relating to "Simon Wapo Trust Deed Account", I 
which revealed that K3,280,000.00 was deposited into that account in I 
10 cheque payments cleared by Bank of Papua New Guinea between 

24 September 2004 and 23 December 2005. 

FINDINGS I. Liability 
In Issue 

(a) No Solicitor General file 

1 . The records and evidence of the Solicitor General's office confirm that there 
was no Solicitor General file for the alleged claim filed by Simon Wapo & 25 

others against Allan Kundi and the State under WS 1 72 of 2000, or at all. 

A 

2. As there was never a Solicitor General file in existence in respect of I this 
matter, the purported letter dated 21 March 2003 to Secretary for / Finance from the 
Solicitor General, Zacchary Gelu, requesting a / cheque in the sum of K4 million be 
drawn in favour of Simon Wapo I is fraudulent. This was confirmed in evidence by 
Zacchary Gelu, who J/ denied knowledge of any such document as he was purportedly 
the 

author of the letter dated 21 March 2003 and allegedly the Solicitor 



284 



General at the time. This is shown in relevant excerpts of the 
transcript of 6 March 2009 containing his answers to questions raised 
by the Commission, which are reproduced hereunder: 

[At 2684-2686] 

"A: Thank you Chief Commissioner. In relation to schedule 13, the case of Simon Wapo 
and 25 others -v- The State in WS 172 of2000 have been subject to scrutiny by the 
Parliamentary Public Accounts Committee where I was summonsed to appear before 
it. Before the Committee 1 deny knowledge of the claim. Therefore my answers to the 
question raised are as follows: 

(a) I have no knowledge of the court order dated 28 October 2002. My first 
name in front of the court order was spelt incorrectly. My name is spelt 7A- 
C-C-HA-R-Y G Gelu and not Zachery Gelu. 

(b) The signature on the certificate of judgment was not my signature; and I am 
not aware of the certificate the judgment dated 28 February 2003. 

(c) The letter to the Department of Finance was dated 21 March 2003. I was 
suspended and charged as Solicitor General on 6 March 2003 with 
instructions not to enter the office of the Solicitor General. Therefore, when 
the letter was sent and signed I was not in office. My signature has been 

forged. 

(d) I was no longer the Solicitor General on 21 March 2003 to verify the 
authenticity of the court order and certificate of judgment. 

THE CHAIRMAN: That is fine, thankyou. 

MR GERORO: Chief Commissioner, if we may exhibit those documents referred to 

for purposes of record - ? 
THE CHAIRMAN: Yes. 



285 



MR GERORO: Mr Gelu, if you can identify the documents to confirm that those are the 

documents you are referring to? 
THE CHAIRMAN: GW1&2. 
MR GERORO: There are three documents Chief Commission, the first is the letter dated 21 

March 2003 under the letter the Solicitor General signed by Zacchery Gelu, 

to Secretary Department of Finance, Attention Boas Hembehi- GW1 ? 
THE CHAIRMAN: Yes. 
MR GERORO: Second should be an order on 28 October 2002 and entered on 28 February 

2003 - GW2, and the last document certificate of judgment dated28 

February 2003 can be exhibited as GW3? 
THE CHAIRMAN: That is fine. 



[EXHIBIT TENDERED - GW1 -LETTER DATED 21 MARCH 

2003 SIGNED BY MR GELU TO SECRETARY, 

DEPARTMENT OF FINANCE] 

IEXHIBIT TENDERED - GW2 - ORDER ON 28 OCTOBER 

2002AND ENTERED 28 FEBR UAR Y2003J 

[EXHIBIT TENDERED - GW3 - CERTIFICATE OF 

JUDGEMENT DATED 28 FEBR UARY2003] 

MR GERORO: Mr Gelu, if I may just ask in relation to GW1 , letter dated 21 March 2003. 

The Action Officer there is identified as aD Eambu? 
A: Yes. 

Q: That would be Mr David Tambu ? 
A: That is David Tambu. 

Q. Was Mr Tambu in the office of Solicitor General at the time? Was he employed by the office of 
the Solicitor General as a Legal officer as identified in the document? 



286 



A: He was a Legal officer at that time hut I understand at that time he resigned to contest the 

National Elections. 
THE CHAIRMAN: He was not there at that time? 

A: He was not there at that time. " 



3. Further, there was non-compliance with Section 5 of the Claims By and Against 
the. State Act 1996. 

(b) No National Court file 

4. The records and evidence of the National Court Registry confirm that there 
was no claim filed by Simon Wapo & 25 others against Allan Kundi and the 
State under WS 172 of 2000, or at all. 

5. As there was never a court file in existence in respect of this matter, the 
purported Court documents namely, Court Order entered on 28 October 
2002 and Certificate of Judgment dated 28 October 2002 were fraudulent. 

II. Assessment of damages 

6. The purported Court Order entered on 28 October 2002 for judgment 

against the State in the sum of K4,000,000.00 inclusive of interest, and costs 
agreed at K6,000.00, was fraudulent so no proper assessment of damages was 
ever done. 

III. Steps taken (or not taken) by Solicitor General in defence of the claim 



287 



All the documents were fraudulent. As such, the Solicitor General should 
immediately commence recovery action against persons involved in this fraud, 
including Simon Wapo and BSP Ltd. 



IV. Processing of claim and Pay-out 

8. There were 12 payments made between 24 September 2004 and 23 

December 2005 as noted from the extract below obtained from the 
Department of Finance. 







Cash Book and Vote No: 


Cheque 


Transaction 






Date 


Div 


Funct 


Act 


Item 


Number 


Amount (K) 


Particulars 


1 


24/09/2004 


460 


31 








791270 


500,000.00 


Pmt for o/s 
c/o 


2 


1/10/2004 


460 


6 








791791 


500,000.00 


Pmt for 

replacement 

chq#791270 


3 


3/11/2004 


207 


4201 


2107 


135 


794233 


200,000.00 


O/S C/O 
WS172of 
2000- 
compens. 


4 


6/12/2004 


207 


4201 


2107 


135 


797227 


700,000.00 


O/ standing 
court order 

(W.S 
172/2000) 


5 


16/12/2004 


207 


4201 


2107 


135 


798138 


200,000.00 


O/S C/O ws 



288 



















#172/2000 


6 


10/3/2005 


207 


4201 


2107 


135 


804830 


350,000.00 


P/pmt for cert 
of judgment 


7 


10/5/2005 


207 


4201 


2107 


135 


810029 


500,000.00 


P/Payment 
ofC/Order- SG 

43/1711 


8 


3/6/2005 


207 


4201 


2107 


135 


812533 


200,000.00 


Pmt for o/s 
C/O 


9 


1/7/2005 


207 


4201 


2107 


135 


814722 


500,000.00 


Payment of 
O/S Court 
Order 


10 


31/08/2005 


207 


4201 


2107 


135 


818833 


50,000.00 


Pmt for o/s 
court or 


11 


23/12/2005 


207 


4201 


2107 


135 


827192 


80,000.00 


Auth. 

Cancellation 


12 


23/12/2005 


207 


4201 


2107 


135 


827192 


80,000.00 


O/S Court 
Order 
















3,860,000.00 





9. The following findings are made in respect of the payments - 

(a) Payment under items 1 & 2 above in relation to cheque 
numbers 791270 & 791791, respectively were made from funds 
not legally available. That is from Trust Fund Suspense Account # 
2. Consequendy, the total of Kl million paid is considered as 
illegal payments. 



289 



(a) FF3 and FF4 for payment under items 1, 3, 4, 6, 7, 8 and 9 above were 
raised and signed by Boas Hembehi as Financial Delegate and Jacob 
Yafai as Section 32 officer, which were beyond their financial 
powers / authority. 

(b) Payments under items 1 and 11 above were purportedly cancelled 
according to the Department of Finance records. Bank of PNG's 
Clearing Unit confirmed that both cheques were presented separately 
and clearance was given to BSP Ltd for payment under item 1 1 for a 
K80,000 cheque. 

] (c) All the payments made were in the name of Simon Wapo and 

I he collected them personally or through his accomplices at the 

DoF and not through the SG office, contravening the standard 

procedures. 

(d) In all material respects, all the above payments are illegal. 

b. Tracing of proceeds 

.The Commission summoned four (4) banks based in Port Moresby to supply details 
of Simon Wapo's bank account, if any, including transactions related to the account. 
Three (3) banks responded of having no account in the name of Simon Wapo, namely 
ANZ (PNG) Ltd, Westpac (PNG) Ltd and Maybank (PNG) Ltd. BSP Ltd confirmed 
holding such account and provided bank statements and copies of cheques. The 
details of the account are as follows: 

(a) Account name: Simon Wapo Trust Deed Account 

(a) Account number: 100 1013152 

(b) Bank: Bank of South Pacific 



290 



(c) Branch: Waigani 

(d) Simon Wapo is the sole signatory to the account. 

16. The schedule below details the deposits and the withdrawals made on the 
account: 





Date 
Deposit 


Amount 
Deposit 


Date 
Withdrawal 


Amount Withdrawal 


1 


6-10-04 


500,000 


6-10-04 


10,0000 


2 






7-10-04 


480,000 


3 


4-11-04 


200,000 


5-11-04 


196,000 


4 


8-12-04 


700,000 


8-12-04 


10,000 


5 






9-12-04 


690,000 


6 


31-12-04 


200,000 


31-12-04 


200,000 


7 


11-3-05 


350,000 


15-3-05 


340,000 


8 


12-05-05 


500,000 


12-05-05 


250,000 


9 






13-05-05 


248,000 


10 


8-06-05 


200,000 


8-06-05 


200,000 


11 


4-07-05 


500,000 


4-07-05 


500,000 


12 


1-09-05 


50,000 


1-09-05 


50,000 


13 


28-12-5 


80,000 


28-12-5 


80,000 






3,280,00 





3,254,000 








Credit 


26,000 



17. The following findings are made in respect of the bank transactions above involving 
the settlement proceeds — 

(a) All cheques deposited were cleared on the same day. The BSP Ltd bank 
staff that assisted Simon Wapo perform all the clearances was a John Wailala; 



291 



The withdrawals were all in cash done on the same or the next day; 

Payments under items 1 and 11 of DoF records were confirmed as 
cancelled since they were not deposited into the BSP Ltd account; 

The bank account was created with the assistance of a John M. Wailala 
of BSP Waigani on 6 October 2004. The following 
documentations/references were used to opened the account — 

(i) A letter by DoF Financial Controller Mary Martin dated 16 

March 2005; 
(ii) A letter by DoF FAS Jacob Yafai dated 1 October 2004 

addressed to Manager of BSP explaining the background of the 

payments made to Simon Wapo from the DoF; 
(iii) A trust deed done by 25 members of the claim authorising 

Simon Wapo to operate the account on their behalf, and be sole 

signatory; 
(iv) It is difficult to identify the name of the Commissioner of 

Oaths since the stamp was not legible, just a signatory; 
(v) Copy of certificate of judgment pertaining to the matter WS no. 

172 of 2000; 
(vi) BSP Acceptable Referee Declaration Form was signed by the 

following two referees — 

a. Margoni Wamanimbu, Manager (Accountant), Police 
Credit Fund, P O Box 7580, Boroko, NCD 

b. Taian Thomas, Lawyer, Boroko Police Station, Telephone 
no. 324 4314/685 5272. 



292 



c. An identification letter addressed to Manager, BSP from 
principal of Yagi Lawyers, Mr. Joseph Yagi, identifying 
Simon Wapo. 

18. The above information from BSP Ltd was gathered purposely to identify any 
persons who may have benefited from the proceeds apart from Simon Wapo. 
Unfortunately, the Commission did not achieve the desired result since all 
withdrawals were done in cash to avoid detection, and presumably distributed to the 
Simon Wapo's accomplices. 

19. The Commission also finds that Justice Yagi has provided an adequate explanation 
as to the circumstances surrounding the issuance of the letter dated 24 September 
2004 to BSP Ltd, which bears his signature and his former law firm's letterhead 
when he was in practice. He confirmed being the author of the letter but stated he 
was misled by a relative of his named Alphonse Silas, then unemployed residing at 
Gerehu Stage 6, NCD and now employed by Office of Climate Change & 
Environmental Sustainability. Justice Yagi stated that he was introduced by 
Alphonse Silas to a person identified as Simon Wapo whom he came to know a year 
later as Boas Hembehi. 

(c) Status of criminal proceedings 



20. The Commission notes the following criminal proceedings: 

(a) Boas Hembehi - committed to stand trial in the National Court on 
charges for false pretence and misappropriation. Trial pending. 



293 



(b) John Wailala - committed to stand trial in the National Court on 

charges for false pretence and misappropriation. Trial pending. 

(c) Jacob Yafai- Information struck out on 12 October 2006 

(d) Moko Esso - Convicted by David, J for misappropriation as 

reported by The National on 2 October 2009 at page 4. Awaiting 
sentencing. He was found to have posed as "Simon Wapo" and 
collected several cheques at the Department of Finance before 
cashing them and applying the money to his own use. 

RECOMMENDATIONS 

From the evidence received by the Commission, the recommendations are 
as follow: 

Referral to the Secretary for Finance 

1 . Immediate stop payments on any further claims for payment made in respect 

of this matter 

2. Immediately investigate and report any payments made after 1 July 2006 to 

Royal Police Constabulary and Attorney General in respect of this matter. 

Referral to the Attorney General 

3. Immediate commencement of an action against Moko Esso, Alphonse Silas, 

John Vailala, and Boas Hembehi to trace and recover 



294 



the sum of K3,280,000.00 in whatever form (cash, property or other 
investments). 

4. Immediate commencement of an action against Bank South Pacific (PNG) 
Ltd to recover the sum of K3 ,280,000. 00 for facilitating fraud and not acting 
with due diligence. 

Referral to the Royal PNG Constabulary 

5. Mrs Mary Martin, former Financial Controller of Finance Department and 
signatory to various cheque payments, for being an accomplice in committing 
fraud by authorising BSP Ltd, in writing, to pay the fraudulent claimant.. 

6. Margoni Wamanimbo, Manager, Police Credit Fund Ltd for being an 
accomplice in committing fraud by assisting the fraudulent claimant open a 
bank account with BSP Ltd. 

7. Thomas Taian, lawyer, Boroko Police Station for being an accomplice in 
committing fraud by assisting the fraudulent claimant open a bank account 
with BSP Ltd. 

Referral to the Lawyers Statutory Committee 

8. Thomas Taian, lawyer, Boroko Police Station for dishonourable, improper 
and unprofessional behaviour for being an accomplice in committing fraud 
by assisting the fraudulent claimant open a bank account with BSP Ltd. 



295 



Referral to the Certified Practising Accounts (Disciplinary <& Ethics Committee) 

9. Margoni Wamanimbo, Manager, Police Credit Fund Ltd for dishonourable, 
improper and unprofessional behaviour for being an accomplice in 
committing fraud by assisting the fraudulent claimant open a bank account 
with BSP Ltd. 

Referral to the Commercial Bankers Association, commercial banks and financial 
institutions 

10. Reform processes and procedures to enable detection of such fraudulent 

(a) Opening of bank accounts; 

(b) Processing of deposits 

(c) Processing of withdrawals 

Consequential legislative or other reform 

1 1 . National Court Rules be amended to the following effect: 

a. the requirement of a "State" Court track to exclusively deal with all 
claims made by and against the State. 

b. official seal of the National Court be impressed on all originating 
processes and all judgments in the nature of final orders. This requires 
necessary increase in fee to be paid 

c. Registrar to create and maintain Register of court documents covered by 
(b) above 

d. National Court stamp to be used for ordinary court documents 



296 



Financial Instructions made under the Public Finance (Management) Act 1995 be amended 
to the following effect: 

a. legal clearance for all court related claims for payment shall be in 
writing from Office of Attorney General upon recommendation by 
Solicitor General 

b. the payment of court related claims by Department of Finance shall be 
based on the production of original clearance letter, which shall — 

i. where court order for payment - 

O emanate from person occupying office of Attorney General 

O bear SG file reference number 

o enclose certified copy of Order impressed with National 
Court seal o 

recommend payment 
ii. where deed of setdement for payment - 

o original duly signed Deed of Setdement bearing respective 

signatures of Attorney General on behalf of the State and the 

Solicitor General as his witness o emanate from person occupying 

office of Attorney General 

o bear SG file reference number 

o contains National Court order sanctioning/ approving 
settlement 

c. Finance Form 3 be revised to incorporate, as an attachment, the internal 
pre-audit verification report 

d. all cheques for payment of court related claims to be forwarded to 
Office of Solicitor General for collection in the following 
circumstances:- 



297 



i. where no lawyer on record - collection by the claimant in person 
provided appropriate identification is produced, such as passport, 
driver's licence or original statutory declaration; 

ii. where lawyer on record - collection by lawyer on record. 

e. Solicitor General maintain a register of all — 

i. Clearance letters issued to Department of Finance 

ii. Cheques and relevant details received from Department of Finance 

pursuant to clearance letter 
iii. Cheques collected from his office by claimant or claimant's lawyer 

f. Secretary for Finance maintain a register of all — 

i. Clearance letters received from Solicitor General 

ii. Cheques sent to Solicitor General pursuant to clearance letter 

Public Services (Management) Act 1995, related legislation and 
instruments be amended to the following effect: 

a. Prescribe "serious disciplinary offence" is committed where: 
i. State suffers loss as a result of negligence or failure to 
exercise due care in performance of duties 

b. On a finding of "serious disciplinary offence" — 
i. Ground for termination 

ii. Ineligible for appointment to any public office 



298 



(0 



Michael Tendele 



A. Does the matter fall within the Terms of Reference? 

The matter arose from a default judgment for a total amount of 
Kl,277,430.00 purportedly made by the Mendi District Court. The 
judgment was awarded to Michael Tendele and 112 other claimants claiming 
separately instead of as a class action. 

The matter is covered under Terms of Reference Numbers l(ix), (x),(xi), 2, 
3, 4,10 and 12. Please refer to the attached Terms of Reference. 

B. Source of Information and Documentation 

This brief comprises of facts and findings from the files and records of; 

• The Magisterial Services 

• Mendi District Court 

• The Department of Finance 

• Documents provided by Simon Norum lawyers. 

C. Relevant Facts 

The Matter 

1 . The matter arose from an alleged police raid on a village in Tari, 

Southern Highlands Province on the 15 th July 1999. Dwelling houses 
were burnt down, trade stores looted and cash croos destroyed. The 



299 



Commission has not sighted any sworn affidavits to support these claims. 

Michael Tendele instructed Simon Norum lawyers based in Mt. Hagen. 
Section 5 Notice was given to the State in a letter dated 30 th August 1999. 
Hitelai Polume the then Acting Solicitor General, acknowledged the Notice in 
a letter dated 04 th October 1999 and advised that the office was awaiting 
instructions and would advise in due course. In the meantime the file was 
allocated to Mr. John Kumura who was based in the Mt. Hagen SG office at 
that time. 

The File from the Solicitor Generals office has not been provided to the 
Commission. But from all appearances, the Solicitor Generals office did 
nothing to defend this claim. In a letter written to the Finance Department to 
authorize payment of the court order the SG office blamed the police for not 
giving instructions (annexure ). However there is no evidence that instructions 
were sought in the first place. 

For some reason, Simon Norum decided to commence action against the 
State in the District Court at Mendi. There are jurisdictional issues involved in 
this decision as the matter allegedly occurred in T ari which is a gazetted sitting 
area for the District Court. A total of 113 civil summonses on complaint were 
filed for the 113 plaintiffs. Effectively they all became separate cases/claims 
although they arose from the same set of facts. That is the reason why the 
point is raised that it would have been neater to file the Action in the National 
Court under one writ of summons naming all the claimants. Noting also the 
fact that the damages suffered involved burning down of dwelling houses, 
looting trade stores and chopping down coffee trees, 



300 



c 



one would assume that this would result in damages exceeding Kl 
0,000.00 for at least some of the individuals among the 113. 

According to Simon Norum, the case was first mentioned on the 08 th of 
April 2000, then on 18 th August 2000and finally on the 07 th September 2000. 
On all those dates the State failed to turn up. On the 07 th September the 
Court ruled in favour of the plaintiffs based on Affidavits filed by Norum 
(Yet to be seen). Norum has not included a copy of the Magistrates decision 
awarding damages to the 113 plaintiffs. 

In possibly the largest award made contemporaneously (in one single day) in 
the history of the District Court of Papua New Guinea, the Court sitting in 
Mendi made orders for the State to pay Kl,277,430.00 to Michael Tendele 
and 112 of his tribesmen. What boggles the mind is that the Magistrate one 
Raphael Appa, is supposed to have heard and disposed of a total 113 matters 
in a single day. 

The total amount of Kl,277,430.00 was broken up into the following 
categories; 

Monetary damages K 821,030.00 Exemplary damages K 
30.000.00 



.awyers Cost K 425,600.00 



Total KL277.430.00 

Commissioners have noted from the opening done previously that the legal 
fees charged for a single days work in the District Court in a 



301 



v matter that never went to trial were quite high. In fact it amounts 
| N close to 50% of the total amount awarded. 

9. Payment of this purported court order was first made on 29 th July 

2003 and was largely because the then Solicitor General, Mr. 
Zacchary Gelu wrote a letter to the Finance Department requesting 
payment. In the letter he blamed the police for not giving instructions 
to defend the case. He also said that although there were in fact 113 
separate cases, they all arose from one incident and so a request was 
made to issue only one cheque. 

10. For reasons which will become clear once Zacchary Gelu gives 

evidence, he requested Finance to pay a sum of Kl,640,21 1 .00. This 
is K362,081.00 more than was awarded by the District Court. 

111. According to documents obtained from the department of Finance, a 

total of Kl,740,211.00 was paid out between 2003 and 2006. There is 
no explanation for the payment of the additional sum of 
K462J81.00. 



11/16/2005 


1055060 


207 


4201 


2107 


135 


Michael Tendele 


PymntolOOrder-DC« 


CO 


823962 


40,000.00 


5/16/2006 


1077193 


207 


4201 


2107 


135 


Michael Tendele 


Replcmntchq#835887 


CQ 


836697 


50,000.00 


6/1/2006 


1078268 


207 


4201 


2107 


135 


Michael Tendele 


O/S C/Order P/Pml 


CO 


837746 


200,000.00 


6/11/2006 


1066362 


207 


4201 


2107 


135 


Michael Tendele 


O/S Court Order in 


CQ 


641926 


200,000.00 


7/29/2003 


925293 


207 


4201 


2107 


135 


Michael Tendele ;' 


Pmto/»c/orderbr 


CQ 


728753 


50,000.00 


9/23/2003 


935958 


207 


4201 


2107 


135 


MichaelTendele8 


Pmt o/s c/order (par 


CQ 


734207 


145,000.00 


11/27/2003 


946677 


207 


4201 


4123 


135 


MichaelTendele8 


Certificate of Judge 


CQ 


740915 


40,000.00 


12/15/2003 


951310 


207 


4201 


4123 


135 


MichaelTendele8 


O/S Legal Coat 


CQ 


742B02 


200,000.00 


5/14/2004 


976902 


207 


4201 


2107 


135 


Michael Tendele t 


Pmto/sc/orderfees 


CQ 


776441 


35.211.00 


6/7/2005 


1034651 


207 


4201 


2107 


135 


Michael Tendele ;' 


Pmt for o/s c/order 


CQ 


812737 


100.000.00 


5/3/2006 


1075811 


207 


4201 


2107 


135 


MichaelTendele& 


0/SC/OrderfDC#:12 


CQ 


635887 


50.000.00 


5/3/2006 


1075811 


207 


4201 


2107 


135 


MichaelTendele8 


0/SC/Order(DC*12 


CQ 


835867 


50,000.00 


12/31/2006 


1106891 


207 


4201 


2107 


135 


MichaelTendele8 


PmtC/OrderDCK126/0 


CO 


655235 


180,000.00 


10-12-2004 1 


11229 


207 


4201 


2107 


135 


Michael Tendele ft 


O/S CTOrders fees 


CQ 


797440 


300,000.00 


5-12-2004 1 


10155 
























2074201 


2107 


135 Michael Tendele 8 P/pmt o/sc/oDC CO. 




797164 


100.000.00 






















1,740.211.00 


SHiii§ 



D. Recommended Findings 

A The Solicitor General (SG) was negligent in not filing a Defence to the 
claim. 



302 



> The Magistrate who made the Orders, Mr. Raphael Appa was based at Mt. Hagen 
in the year 2000, not in Mendi. 

> Legal costs for cases that never went to trial are quite excessive when it makes up 
almost 50 % of the amount awarded. 

> Zacchary Gelu as Solicitor General requested for Finance to pay K362, 081.00 
more than the Court awarded. 

> Further that the Department of Finance actually ended up paying out an 
additional K462.78 1.00 

_pH$rT"Simon Norum set up this scam>jje^knew the capacity of the Solicitor 
Generals jifEce-warltretched to the limit even in handling matters commenced in 
the National Court. He would have known that it would be almost impossible 
for the Solicitor General in Mt. Hagen to travel into Mendi to defend matters 
filed in the District Court. 

F. Recommendations 

1. Simon Norum is referred to the Fraud squad or investigation. 

2. Simon Norum is also referred to the Law Society for further investigation on 
his charging of excessive fees. 

3. The question of taking instructions by the Solicitor Generals office is 
addressed as it seems that no effort is made to seek same. This is especially 
true for the Highlands provinces which has led to increased litigation by 
opportunistic claimants. 



303 



TABLE OF DOCUMENTS TO BE TENDERED 



Exhibit 


Description 


Comments 


OD 1 


Section 5 Notice 


Contained in letter written by Simon Norum to the Solicitor 
General dated 30 August 1999. 


OD2 


Letter accepting above 


Hitelai Polume as Acting Solicitor General wrote to Simon 
Norum acknowledging s. 5 Notice. Letter dated 04/10/99 


OD3 


Norum letter to SG 


Dated 14/09/2000 advising that SG failure to turn up for 
hearing had resulted in decision made in favour of plaintiffs 



304 



Wesley Aisora A. Parties 
(i) For the State: 

(a) Finance Department 

(b) Attorney General/ Solicitor General 

(c) National Court Registry 

(d) Police Department 

(e) Constable Ben Babat 

(ii) For the Claimant: 

(a) Wesley Aisora for and on behalf of Ajura villagers 

Introduction 

1. This matter came before the Commissioner on Wednesday, 8 October 2008 and the 
matter was called and brief facts presented. The matter was subsequendy 
adjourned to allow parties with interest to come forward and provide response in 
respect of the matter. Initially, there were no documents (at all) to identify the full 
facts or nature of claim leading to the alleged claim (refer to the original brief). All 
we had on file (at that time) were the following documents, they are:- 
(i) letter from Ms Hitelai Polume-Kiele to Mr Mario Cueva dated 20 th June 
2006; marked 1 - SG 

(ii) letter from late Mr Lohia Raka to Ms Hitelai Polume-Kiele dated 13 June 
2006; marked 2 - SG. 

(iii) COI letter to the Acting Solicitor General and copied to Ms Kiele and Mr 
Augerea dated 17 th September 2008. Marked 3 - COI. 



305 



2. The brief facts derived from the documents identified above were that the claimant 
Wesley Aisora & Others allegedly obtained a consent order for K7, 527,264.20 on 
4 th June 2004 and submitted the said order to the Finance Department for 
payment. It appears the letter from Ms Kiele to Mr Cueva was prompted by the 
fact that Mr Cueva sought instructions or clearance from the Solicitor General in 
relation to the said order. 

3. After checking records at the Solicitor General's office, Ms Kiele wrote to the 
National Court registry to confirm with their records also. The letters from Mr 
Augerea and Ms Kiele state there are no records (at all) of such a case/matter in 
the Solicitor General's file and the National Court Registry. 

4. Following issuing of summons to Ms Kiele, Mr Augerea and Messrs Gabriel Yer 
and Mario Cueva from the Finance Department, we have now received certain 
documents relating to this matter from these persons and those with interest in the 
matter. Mr Cueva was cross examined and at the same time produced documents 
which were marked as Exhibit 4 - FD. Essentially, Mr Cueva confirms that no 
payments have been made in respect of this matter. 

5. It is important to state at this juncture that initially documents (evidence) stated 
above indicate that there were no files both at the National Court Registry and the 
Office of the Solicitor General. 

National Court file 

6. In relation to the National Court file, after the issuing of the Summons, Mr 
Augerea provided the Commission with a 'List of Matters' containing 



306 



the search results. The search results provided by Mr Augerea is marked 4-NCR. 

7. Commissioners note from the List of Matters (which also includes this matter), 
under the heading 'database search' Mr Augerea has indicated that the file exists. 
Furthermore, the Commission was provided with the Supplementary Court file 
(not the original court file). 

8. However, we have two conflicting letters both written by former Registrar, late 
Lohia Raka both stating the opposite, that is, letter dated 13 June 2006 (see 
document marked 2 - SG) states that the registry does not have a record of a file 
under the name Wesley Aisora, and further states that the court file reference W.S 
No. 754 of 2000 is for a different matter filed here in the Waigani National Court 
parties of which are . Steamships Ltd — v- South Pacific Builders. 

9. Another letter is dated 20 June 2006 (almost a week later from 13 June 2006, first 
letter) also by former Registrar, late Lohia Raka stating that this is a Goroka matter 
(presumably filed in Goroka). The letter further confirms that W.S No. 754 of 
2000 is a Wagani matter, parties of which are Steamships Ltd -ats- South Pacific 
Builders. This time the letter states it is proceedings filed by South Pacific Builders. 
Note difference in V and ats'. Letter is marked 5 - NCR. 

10. We will address the issue as to whether or not the National Court Registry did 
have a file created for this matter. At the outset, our proposed findings are that the 
file was only created recently at the request of Makap Lawyers, notwithstanding 
the fact that the Commission was provided with a 'Supplementary Court file' and 
not the original court file. 



307 



Solicitor General file 

11. Although Ms Kiele by letter dated 20 th June 2006 (see letter marked 1 - SG), 

advised that the Solicitor General does not have a file in respect of this matter, 
following issuing of the Summons, the Commission was provided with a Solicitor 
General office file with the reference SGI 88/07. 

12. We will also address in the submission as to whether or not there is a Solicitor 

General file for this matter, however, at the outset our proposed findings are that 
the file was created recendy only for "record keeping purposes" in relation to 
exchange of correspondence. We note that the file was only created recendy for 
purposes of "record keeping". That is when lawyers and the claimants were 
pursuing the claim. We have again written to Ms Kiele and Mr Augerea to address 
the Commission on the circumstances (if not reasons) as to how the files came 
about when initially there were no files. See letter marked 6 — COI. 

13. As stated above, initially, there were no documents at all in relation to this matter. 

The brief facts stated below are derived from the documents provided by Mr 
Augerea and Ms Kiele. 

Brief facts /evidence 

14. The Plaintiffs allege that on or about 6 th May 2000, Constable Ben Babat (First 

Defendant) a Policeman based at Kainantu together with other 
| Policemen also from Kainantu entered and raided Ajura village after U suspecting that 
youths from the said village were involved in the theft of 
\ a vehicle. The Policemen entered the village and in the process of 

V 



308 



conducting raid burnt down houses and caused damages to properties and at the 

same assaulted several villagers causing injuries. 

15. The Plaintiffs then allegedly engaged Manu & Associates Lawyers and a writ of 
summons was filed on 13 November 2000 at the Waigani National Court. No 
section 5 notice was lodged for this claim. There is no evidence of such 
notice/letter on the Solicitor General's file. (Note, the word allegedly' is used to 
describe representation by Manu & Associates Lawyers as the firm denied acting 
for the Plaintiffs. This is discussed below). Marked 7 - NCR is the Writ of 
Summons. 

16. The Plaintiffs claim that as a result of the unlawful actions of the Policemen they 
sustained damages and claim the sum of K7, 527, 264. 20 as 'general damages'. 

17. The Writ of Summons was allegedly served on a lady (not named) but identified 
as the Secretary to the Solicitor General on 28 November 2000. Marked 8 - NCR 
is the copy of the Affidavit of Service. 

18. It appears the Solicitor General failed to file a Defence nor a Notice of Intention 
to Defend and as such on 17 June 2001, the Plaintiffs allegedly obtained an order 
at the National Court Waigani for default judgment in the sum of K7, 527,264. 20 
with costs and interest at 8 per cent. The time for entry of the orders was also 
abridged. Marked 9 -NCR is the court order. 

19. The authenticity and legality of the court order is doubtful for three main 
reasons:- 

(i) this is a claim arising from an alleged unlawful police raid. The Plaintiffs claim 

K7,527,264.20 under the heading general 



309 



damages. In the normal practice, even if the State is said to be in 

default, normally the court would grant default judgment but with 

Homages t o be assessed as the Plaintiffs are required to prove their 

\ losses. In this case, there is no document on the Solicitor General 

1 file and the Supplementary National Court file providing evidence 

1 quantifying the actual value of losses to the tune of K7,527,264.20; 

(ii) The Court Order is said to be made on 17 June 2001 and filed on 
22 June 2001. However, the dates are confusing and contradicting. 
Below the terms of the actual orders, it states, ordered 17 October 
2001 and entered 20 October 2001. This is not in conformity with 
the dates on the front cover page. It appears the signature of the 
Registrar and the dates were also scanned (photocopied) and 
inserted; and 

(iii) in such instances, the court rarely grants abridgment of time. There 
is no reason for ordering abridgment of time. 

There are no documents such as a Notice of Motion and affidavits both 

in the National Court and the Solicitor General's file indicating 

(evidencing) that an application for default judgment was filed. 

However, there is an affidavit of service stating (quote), . . / have served a 

sealed copy of the Default Judgment herein on the Third Defendant... '. An 

application for default judgment should comprise the following essential 

documents, they are:- 

(i) Notice of Motion seeking default judgment to be entered; 

(ii) Affidavit in support; 

(iii) Affidavit of search confirming that a Defence was not filed; 

(iv) Affidavit of service, confirming service of both the writ of 

summons and the Notice of Motion seeking default judgment; 



310 



(v) Forewarning letter addressed to the Solicitor General (sometimes/often 
annexed to the affidavit in support). 

Marked 10 - NCR is the copy of the Affidavit of Service. 

21. In this case, we are not sure if the Affidavit of Service confirms service of the 
above documents as it basically states service of copy of the Default Judgment or 
it was for service of the court order granting default judgement. If the affidavit of 
service was for the delivery of documents in relation to the default judgment 
application, then there appears to be a problem as documents were served well 
after the court had already granted default judgment. The Affidavit of Service is 
not conclusive and in the normal circumstances a proper affidavit of service must 
be filed to confirm if documents were actually served (personal service). There is 
an issue with service of court documents. 

22. On 4 th June 2004, the court ordered by consent of the parties in the following 
terms :- 

(i) That the Defendants pay the Plaintiff the sum of K4,559,443.00 being for all 
outstanding payments for the period January 2001 to December 2003. 

(ii) That the Defendants pay the Plaintiff the sum of K2,428,635.40 being 
damages assessed. 

(iii) That the Defendants pay the Plaintiff the sum of K539, 185.80 as damages 
on quantum meruit basis for the period 2000. 

(iv) That the Plaintiff abandons its claim for judicial interest at 8% per annum. 

(v) That the Plaintiff party/party costs be taxed if not agreed. 



311 



Parties who allegedly consented to the said orders are, Mr Timothy L Cooper, 
lawyer for the Plaintiffs and Mr Francis Kuvi for the State. Marked 11 - NCR is a 
copy of the Consent Order. 

23. Commissioners do not know the reason why a consent order was obtained when 
an order had already being made which can be relied on to enforce the claim. 
There is a court order already in place granting the sum of K7,527,264.20 so what 
is the purpose of obtaining consent order again. This is a clear case of fraud and 
misrepresentation. Some of the reasons for such proposed findings will be made at 
the conclusion below. 

24. On 9 th June 2004 (a week later) Certificate of Judgment was filed for the sum of 
K7,527,264.20. Mr Kuvi signs and endorses the Certificate of Judgment. The 
Certificate of Judgment was signed and endorsed on the same day it was filed. It 
appears the signing and filing of the Certificate of Judgment was done with a lot of 
haste. In the normal practise, the Solicitor General would sign and endorse the 
certificate of judgment a day or sometime later (weeks/months) after it is signed 
by the Registrar National Court as the certificate of judgment would be filed and 
then later served on the Solicitor General for his endorsement. In this case, it was 
signed (endorsed) and filed on the same day. 

Marked 12 - NCR is a copy of the Certificate of Judgment. 

25. On 26 June 2005, Mr Kuvi on behalf of the State and Mr Timothy L Cooper, 
lawyer for the Plaintiffs together with Wesley Aisora (Principal Plaintiff) sign a 
deed of release for the sum of K7, 527,264.20. Again, we raise similar arguments as 
in the case of consent orders. What is the use of signing/ entering in to a deed of 
release when there is already a court 



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26. order purportedly awarding the sum parties have just signed and agreed to 
in the deed of release? This is a case of fraud and misrepresentation (false 
pretence). We will highlight other issues supporting such proposed 
findings. 

Marked 13 — NCR is a copy of the deed of release. 

27. On 4 th October 2005, Mr Kuvi wrote to Mr Otto Wangilan, Finance Department 
to setde the judgment debt as soon as possible. It also appears that Mr Kuvi's 
name and signature were scanned (photocopied) and inserted in the letter as they 
are slanting and further, the usual statement, yours faithfully (etc) is not included. 
Marked 14 - NCR is a copy of the letter dated 4 th October 2005. 

28. The following law firms confirm having acted for the Plaintiffs (apart from Manu 
& Associates Lawyers). They are:- 

(i) Kakaraya Lawyers; 

(ii) Amnol & Company Lawyers; and then recently, 

(iii) Makap Lawyers. However, following investigations of this matter by the 
Commission, Makap Lawyers filed Notice of Ceasing to Act. See letter from 
Makap Lawyers dated 7 th October 2008 which is marked 15 - COL 

29. All these law firms took action or steps to enforce payments/settlement of the 
claim by writing to the Solicitor General and the Finance (Treasury) Department. 
Necessary correspondence and documents emanating from these law firms to 
relevant authorities in regard to this matter are all included in the list of documents 
in this brief. 



313 



29. This is a clear case of fraud and misrepresentation (false pretence). Those involved in 
this case have attempted to defraud the State and their actions amount to 
misrepresentation (false pretence). The basis for such proposed findings (apart 
from those stated above) are stipulated below. 

Reasons/basis for proposed finding of fraud and misrepresentation 

A. Scanned signatures (names) of Messrs Francis Kuvi and Timothy L. Copper 

30. It is our submission that the signatures of both Mr Francis Kuvi and Mr 
Timothy L. Copper have been scanned. Commissioners note from the Court 
Order, Consent Order and the Deed of Release that the signatures do not 
appear straight as one would expect in the normal original documents. In this 
case, the signatures appear slanting (either upward or downward and not 
straight as is in a normal original and genuine document). They are either 
leaning downward or upward. In the case of the deed of release, 
Commissioners note that Mr Kuvi's signature appears leaning upwards whilst 
his name appears leaning downwards. This is the same in the Certificate of 
Judgment. The signatures of Francis Kuvi and Timothy Cooper (and their 
names) were scanned and inserted in the documents. See also signature (and 
the name) of Francis Kuvi in letter dated 4 th October 2005 (marked 14 - 
NCR). It also appears that the signature of the Registrar signing the consent 
order may have been scanned and inserted. 

31. Also on Signatures, there appears to be a major difference in the signature(s) 
of Wesley Aisora, the principal plaintiff. For instance see the difference in the 
Affidavit of Service for the Writ of 



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Summons and the Affidavit of Service of default judgment. See also Wesley 
Aisora's signature on the deed of release. 

Mann & Associates Lawyers never acted for the Plaintiffs 

32. Enquiries with Manu & Associates Lawyers show or confirm that Manu & 
Associates Lawyers never acted for the Plaintiffs. We wrote to Manu & 
Associates Lawyers enquiring about the firm's involvement in this matter 
and Mr Edward Manu, Principal of Manu & Associates Lawyers replied by 
letter dated 7 th October 2008 stating that his firm never acted for the 
Plaintiffs. Our letter to Manu & Associates Lawyers dated 6 th October 2008 
is marked 16 - COI and the response from Mr Manu is dated 7 th October 
2008 and is marked 17 — COI. We have read in full the contents of the 
letter from Mr Manu. 

33. We also enquired with Mr Cooper about his involvement in this matter. Mr 
Copper denied involvement and stated that he would do a written statement 
however as at the date of this Report, Mr Cooper has not provided a written 
response. Commissioners believe that Mr Cooper's signature (name) was 
scanned (photocopied) and inserted Mr Cooper was employed by Manu & 
Associates Lawyers from 2003 — 2004. Proceedings were filed in 2000. 
Further, Manu & Associates Lawyers were never operating from the address 
stipulated on the writ of summons. Marked 18 - COI is a copy of our letter 
to Mr Cooper dated 7 th October 2008. 

34. It appears Mr Cooper's signature may have been scanned (photocopied) 
from the documents in relation to his involvement in the Alert Security 
matter where he was the lawyer acting for Alert 



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Security. This could be confirmed by the fact that, in the consent orders, it 
states (quote), "...J, Timothy L Cooper, Tamer for the Plaintiff 

Company " (underlined). In this case the Plaintiffs are individual 

persons. The reference to "Plaintiff Company's" refers to Alert Security 
company not Wesley Aisora and others. 

Signing of the Writ of Summons and address on Affidavits 

35. If the Writ of Summons was drafted by Manu & Associates Lawyers as the 
firms name appears on the writ of summons, as it is a common practise, a 
lawyer from Manu & Associates Lawyers should have signed the writ of 
summons, however, this is not the case. The Plaintiff, Wesley Aisora signed 
the writ of summons. Further why was it that both affidavits of service have 
Wesley Aisora's name and address on the affidavits and not Manu & 
Associates Lawyers when the writ of summons and the court orders bear 
Manu & Associates Lawyers name and address. 

No court file for this matter 

36. Despite the conflicting letters allegedly written by former Registrar late Mr 
Lohia Raka, we submit that there was never any court file created for this 
matter. It is our view that the earlier letter written by late Lohia Raka dated 
13 June 2006 (see document marked 2 - SG) is legitimate that reflected the 
true and correct position since 2000 (year/ date when the writ was allegedly 
filed). 

37. The letter dated 20 June 2006 may have been written by someone else with 
the signature of late Mr Lohia Raka photocopied if not scanned and inserted. 
This letter further states that Provincial 



316 



National Courts issue their own W.S and O.S numbers. It states that the 
registry does not have a centralised numbering system in place. This 
contradicts what Mr Augerea stated when he appeared before the 
Commission stating that all numbering given to proceedings filed in the 
other centres (National Court) are coordinated and given here at the 
National Court Waigani Registry. 

38. This is further confirmed by the Registrar, Mr Augerea upon our enquiries 
(see letter marked 6 - COI) amongst others in relation to the conflicting 
letters by late Mr Lohia Raka. Mr Augerea has confirmed that all O.S or W.S 
numbers (i.e. court referencing numbers) are allocated by the Waigani 
National Registry. Thus, it is not true that respective registries allocate their 
own court referencing numbers. 

39. Mr Augerea further confirmed that according to the Court Reporting 
Services there are no records of the purported court order of 17 June 2001 
awarding IC7,527,264.20 to the Plaintiffs. Also W.S No. 754 of 2000 belongs 
to Steamships Ltd -v- South Pacific Builders Ltd. 

Marked 50 — NC is the copy of the document (letter) from Mr Augerea in 
response to our enquiries and marked 51 - NC is a copy of the National Court file 
cover confirming that W.S 754 of 2000 is for the matter Steamships Ltd — v- 
South Pacific Builders Ltd. 

40. Furthermore, the Commission notes from the letter dated 20 th June 2006 that 
the letter states that the file is a Goroka matter however the Writ of Summons as 
it appears was filed here at Waigani. It states in the National Court of Justice at 
Waigani. Furthermore, the said letter states that the court order (presumably 
referring to court order of 17 October 



317 



2001) was also obtained at Goroka however it appears the court order was 
filed here at Waigani. It also states in the National Court of Justice at 
Waigani. If Manu & Associates Lawyers acted for the Plaintiffs we would 
doubt that this would be a typographical error (or an oversight), 
notwithstanding the fact that all documents purportedly filed in the 
National Court bear the citation 'In the National of Justice at Waigani.' 

41. Further, Commissioners note from the National Court registry data entry pro- 
forma. The pro-forma is marked 19 - NCR. Where it states Location, the name 
Goroka is stated. Under File Transfer, it then states Transfer Location? Waigani. 
As to Transfer Date, the date is written as 01/02/00. This would mean on the 1 st 
February 2000, the matter was transferred from Goroka to Waigani. The date of 
transfer is contradicting as this would mean that at the date of transfer (01/02/00) 
there was never any matter (file) in the name Wesley Aisora & Others — v- The 
State as the writ was filed in 13 November 2000. The writ of summons for this 
matter was non existent on 1 st February 2000. 

42. Furthermore, where it states Remarks, it states (Quote) 'General damages entered 
for the Plaintiff for damages to be assessed.' This again is contradictory and 
confusing, as documents show that default judgment was granted for the sum 
actually claimed. The order never stated damages to be assessed. 

43. When we summoned the production of the court file, Mr Ian Augerea, Registrar 
provided the Commission with a Supplementary Court file. Marked 20 - NCR is a 
copy of the court file cover confirming production of supplementary court file. 
Commissioners note from the file cover that the file was created on 1 9 June 2008 
(Commence 19/06/08). There was never any court file created for this matter, 
simply 



318 



44. there is no court file for this matter. The Supplementary Court file was 
created at the request of Makap Lawyers. See letter from Makap Lawyers to 
Registrar dated 12 June 2008 - marked 21 - NCR. The notation in the said 
letter reads (Quote), ".. .Marie, create Supp- file, 17/ 6/ 08. Marie m will 
continue look for file - although thorough check has been done in case it is 
located. 17/ 6/08." 

45. Mr Makap of Makap lawyers confirmed in evidence that he had requested the 
Registrar create a supplementary file following his numerous searches at the 
Registry. Mr Augerea also confirmed in evidence that the Supplementary file was 
created to hold documents that have been exchanged pending the search for the 
original file. Mr Augerea however confirmed that the "original court file" was 
never located and in essence confirmed that there was no file registered under the 
Plaintiffs name and the file reference (number) related to a different matter. Mr 
Augerea also stated that the signature on the Court Order and that of the 
Certificate of Judgment belong to Mr Eric Kiso, currendy Assistant Registrar, Mt. 
Hagen National Court. 

No Solicitor General file 

46. Commissioners note that the Writ of Summons was filed in 2000. The file 
reference is SGI88/07. This appears to contradict the evidence provided by Ms 
Kiele as the Commission was advised that when a writ is served on the Solicitor 
General's office, the file reference must correspond with the year the writ of 
summons or the section 5 notice is lodged. In this case, it should be SGI88/00 
(2000). In this case, however the reference to SGI 88/07 which would mean the 
file was only created recently (2007). 



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47. On 12 March 2007, Mr David Lambu wrote to Kakaraya Lawyers advising that the 
Solicitor General had no file for this matter. The letter further stated that the file 
reference referred to in the Affidavit of Ben Babat (First Defendant) purportedly 
prepared and filed by the Solicitor General was a file reference belonging to a 
different matter. 

Marked 22 - SG is a copy of the letter dated 12 March 2007 and marked 23 - SG is 
a copy of the affidavit of Ben Babat. 

48. Further the Solicitor General's file creation instructions sheet confirms that Section 
5 Notice was never lodged by the Plaintiff. Marked 24 - SG is a copy of the 
Solicitor General file creation instructions sheet. 

49. All these issues clearly indicate that there was no file created for this matter since 
the alleged filing of the writ in 2000. Furthermore, the affidavit of service filed by 
Wesley Aisora deposing to service of the writ and default judgment is doubtful for 
the reason that the wording used in both affidavits are identical. 

Evidence of witnesses called 

50. The following persons appeared before the Commission (on summons) and gave 
evidence. They are:- 

i. Mario Cueva — Consultant, Finance Department; 

ii. Petals Bom - Financial Controller, Finance Department; 

iii. Ian Augerea, Registrar, National Court 

iv. Dan Salmon Kakaraya - lawyer and Principal of Kakaraya Lawyers; 

v. Luther Makap - lawyer and Principal of Makap Lawyers; 

vi. Bernard Amnol - lawyer and Principal of Amnol & Co. Lawyers; 



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vii. Dawa Agu Klewaki — lawyer; 

viii. Greg Michael Konjib - lawyer and Principal of Konjib & Associates; 

xi. Paul Kamakande — consultant; 

x. Timothy Cooper — lawyer; 

xi. Francis Kuvi — lawyer; 

xii. Wesley Aisora - claimant 

50. We address each of the above witnesses in the order stipulated above. 

Evidence — Mario Cueva 

51. Mr Cueva is a Consultant with the Finance Department As mentioned above, Mr 
Cueva appeared before the Commission and provided documents that were 
provided to the Finance Department for setdement of the claim. He confirmed 
that no payments were made. Mr Cueva was not able to identify the person who 
lodged the documents for payment at Finance Department but stated that upon 
receipt of the documents a letter was written to the Solicitor General to verify the 
claim. 

Evidence — Petrus Bom (hereafter referred to as c Tetrus") 

52. On 6 February 2009, Mr Kamakande whilst giving evidence stated that he was 
engaged as a consultant by Wesley Aisora to follow up on payment of the claim. 
Mr Kamakande advised that he would attend at Finance Department and speak to 
Petrus regarding the claim. He was advised that a part payment was made in 
respect of the claim by Wesley Aisora and gave him (Kamakande) a copy of the 
warrant. This evidence appeared to contradict the evidence by Mario Cueva in 
relation to payments. 



321 



53. Petrus appeared before the Commission on 13 February 2009 (on summons) and 
gave evidence. Petrus was asked if he had met Kamakande following up on the 
payment and said yes, however, denied advising Kamakande that a part payment 
was made in respect of this matter. The only advice, Petrus told Kamakande at the 
material time was that "...I will check out to see if there is any payments been made 
or not." Petrus also denied ever providing a copy of the warrant that Kamakande 
produced to the Commission alleging that a part payment was made. 

54. Petrus confirmed that no payments were made in respect of the claim. 
Evidence — Ian Augerea 

55. Mr Augerea appeared on 6 February 2009 and on 7 April 2009. Essentially Mr 
Augerea as stated above confirmed that there was no file created for this matter, 
the only file being a Supplementary file. File reference (number) belonged to 
another matter. 

56. One critical piece of evidence by Mr Augerea is that the National Court stamps are 
easily accessible by the Deputy Registrars and the Court Clerks/staff. It is 
therefore submitted that the National Court stamp can be abused like what 
happened in this case. 

Evidence - Dan Salmon Kakaraya 

57. Mr Kakaraya took instructions to act for the claimant in March 2006. In relation to 
the court documents, the Mr Kakaraya was only provided with the copies of all the 
court documents we have on file. Mr Kakaraya actively pursued the matter. It is 
submitted that there is evidence to 



322 



58. suggest that there were seriously problems with this matter however 
Mr 
Kakaraya failed to conduct thorough investigation and also failed 

59. For instance, Mr Kakaraya was well aware of the fact that the current Solicitor 
General refused or otherwise never gave clearance on the matter because of 
serious issues surrounding the matter. However, Mr Kakaraya relied on a letter 
that was fabricated bearing the signature of the former Solicitor General. That is, 
on 31 st December 2007, Mr Kakaraya wrote to the Finance Department stating 
(quote para.3), "...due to the delay in the provision of the legal clearance by the 
current Solicitor General , we enclose legal clearance by the previous Solicitor 
General in the same matter. As you aware, the claim is bona fide and the file 
exists." Mr Kakaraya was asked how he established if the claim was bona fide and 
the file exists. 

60. As to the Solicitor General file, Mr Kakaraya stated, "...Solicitor General, they have 

not confirmed nor denied the existence but I assume they were doing their own 

investigations and collating the file and making the 

relevant enquiry in establishing the " (quote). In this case, Mr 

Kakaraya should not have relied on the purported legal clearance by the former 
Solicitor General as evidence clearly shows the letter was a fabrication. 

61. Furthermore, prior to the letter by Kakaraya to Finance Department dated 31 st 
December 2007, the Solicitor General had written to Mr Kakaraya on 12 March 
2007 expressing serious issues concerning this matter. Mr Kakaraya admitted 
receiving the letter. That letter was sufficient to raise alarm bells and Mr Kakaraya 
ought to have sought detailed instructions from the claimant before taking steps to 
enforce 



323 



62. payment of the claim. When asked about the letter, Mr Kakaraya stated he 
lost track of his client and as such could not respond to the letter by the 
Solicitor General. 

63. Although he mentioned that he had lost contact -with his client and therefore 
could not respond to the Solicitor General's letter, Mr Kakaraya wrote to the 
Finance Department stating that the claim was genuine and that payments be 
settied. It is submitted that Mr Kakaraya's actions were unreasonable and his 
actions may amount to fraud as he knew very well that serious issues arose from 
this case yet he stated that the claim was bona fide and the file exists when the 
evidence by the Solicitor General clearly stated that "no file exists for this matter". 
Furthermore, the Solicitor General file reference on the Affidavit of Ben Babat 
relate to a entirely different matter. That is sufficient for Mr Kakaraya to stop 
taking any further action until full and authentic instructions were sought on the 
issues raised. 

64. Further, it is submitted that Mr Kakaraya was aware of the fact that the claimant 
had engaged other law firms to act for him, yet he never took steps to withdraw 
his services. Mr Kakaraya confirmed that the claimant had advised him of the 
engagement of other law firms. 

Evidence - Luther Makap 

65. Mr Makap confirmed that his firm took instructions to act for the claimant. 
Essentially, Mr Makap confirmed that he requested for the creation of the 
supplementary file. However, they withdrew instructions after noticing that the 
matter was subject of inquiry and that there were serious issues concerning the 
matter. 



324 



Evidence - Bernard Amnol 

66. Mr Amnol was engaged in February 2008 and his services terminated in June 
2008. Essentially Mr Amnol stated that he wrote to the Solicitor General to give 
clearance of the claim but whilst waiting for the response from the Solicitor 
General, his services were terminated. He had only acted for four months, within 
which he stated that not much work was undertaken. 

Evidence — Dawa Agu Klewaki 

67. Mr Klewaki said he met the claimant on three occasions at which he was asked by 
the claimant to assist him draft a claim. Mr Klewaki stated that he only provided a 
sketch/precedent to draft the Statement of Claim and it was written. Mr Klewaki 
stated that he had no idea of the claim by the claimant. 

68. However, Mr Klewaki's evidence is contradictory to that of the claimant as Mr 
Aisora stated in evidence that he was introduced to Mr Klewaki by Eddie Bugie. 
Mr Bugie advised the claimant that he must see Mr Klewaki and he will assist. Mr 
Aisora stated that he was not aware of the kind of assistance Mr Klewaki would 
provide but he stated that Mr Klewaki and Mr Bugie may have spoken about the 
claim. 

69. It is submitted that Mr Klewaki be further investigated into his role in the alleged 
claim as most of the documents used in this case bear the address of Manu & 
Associates Lawyers of which Mr Klewaki was employed. Furthermore, first Mr 
Klewaki stated that he obtained a precedent copy from one of Manu & Associates 
Lawyers files but later 



325 



70. changed it to state that he only provided a handwritten precedent of how to 
make a claim. 

Evidence - Greg Michael Konjib 

71. Mr Konjib took instructions in October 2008. Mr Konjib stated that he was 
instructed by Paul Kamakande who introduced himself as the Consultant for the 
claimant. His engagement was formalized by way of an Agreement. Essentially, Mr 
Konjib's evidence is that they (his firm) never pursued the matter any further as 
following the listing of this matter for investigation by the Commission of Inquiry, 
they were cautious with pursuing the matter any further. 

Evidence - Paul Kamakande 

72. Mr Kamakande was engaged as a Consultant in September 2007. In a letter to the 
Commission of Inquiry dated 28 th January 2009, the claimant, Wesley Aisora stated 
that Mr Kamakande basic function was to 

"...assist investigate the authenticity and validity of the claim ". It 

appears this statement is contradictory to the work undertaken by Mr Kamakande 
because at all times, the claimant was at the disposal of Mr Kamakande. That is to 
say, Mr Kamakande maintained contact (if not regular contact) with the claimant as 
opposed to the lawyers who had difficulty communicating with the claimant. The 
answer to the issue of the "validity" and "authenticity" of the claim rested with the 
claimant yet Mr Kamakande failed to seek detailed instructions from the claimant. 

73. Evidence is overwhelming that Mr Kamakande instead of acting within the scope 
of his appointment he had actually appointed lawyers and took steps to pursue 
payment of the claim. Furthermore, Mr Kamakande was 



326 



74. instrumental in preparing most of the documents. The claimant was 
only asked to sign. Mr Kamakande be referred to the Police for further 
investigation in relation to his involvement in this matter. He is deemed 
to be a crucial witness to this claim. 

Evidence — Timothy Copper 

71. Essentially, Mr Cooper advised the Commission that he had no 

knowledge of the purported claim by the claimant nor did he ever act for 
the claimants. Mr Copper advised that the claim was a fraud and that his 
name and signature was forged. 

Evidence — Francis Kuvi 

72. Mr Kuvi's evidence is similar to that of Mr Cooper. Essentially, Mr Kuvi stated 
that his name and signature was forged. He had no knowledge of the claim nor 
did he ever act for the State in defending the alleged claim. The claim is a fraud. 

Evidence — Wesley Aisora ("claimant") 

73. Mr Aisora is the claimant. Following several.adjoumments, Mr Aisora eventually 
appeared before the Commission and gave evidence respecting this claim. 
Essentially, Mr Aisora confirmed or stated that this was a bogus claim and an act 
to defraud the State. He mentioned that the idea of making up this claim was by 
late Eddie Bugie, an Officer with the Sheriffs Office, National Court. Mr Aisora 
stated that he had no knowledge of court process, etc and in this case all the 
documents were drafted (or prepared) by Eddie Bugie and he was only asked to 
sign and follow up on the claim. 



327 



74. It is submitted that although Mr Aisora knew that the claim was bogus he took no 
step in advising any of the lawyers or the persons whom he engaged to pursue his 
claim. He therefore was actively involved in pursuing this bogus claim. 

D. Findings 

1. There was no Solicitor General file created for this matter. The file provided to 
Commission was only created recently in 2007. No Solicitor General file. 

2. There was no court file created for this matter. The court file provided to the 
Commission was a Supplementary one created at the request of Makap lawyers 
acting for the Plaintiffs. No Court file. 

3. Signatures and names of Mr Francis Kuvi and Mr Timothy L Cooper were either 
scanned or photocopied and inserted on the documents to make them look 
genuine. 

4. Manu & Associates Lawyers never acted for the Plaintiffs. 

5. This is an act to defraud the State. Fraud and misrepresentation (false pretence). 

E. Recommendations 

1. "Wesley Aisora be referred to Police for further investigations. 



328 



2. Court Registry staff involved in facilitating sealing of the documents be 
investigated and referred to appropriate authorities such as Police for investigation 
and charges to e laid. 

3. The Law Society conduct investigations into the conduct of the law firms or 
lawyers involved. 

4. Finance Department must not make any payments. 

5. Paul Kamakande, Dan Kakaraya, Dawa Agu-Klewaki be referred to Police for 
further investigations. 

6. Attorney General, Solicitor General and Finance Department immediately reject 
this claim and mark their records accordingly. 

7. An inquiry be conducted into the National Court Registry to ascertain how 
National Court stamps have been abused and persons involved to be prosecuted 
and be dismissed from their employment. 



329 



INDEX TO DOCUMENTS TENDERED AS EVIDENCE 

1 . Letter from Ms Hitelai Polume-Kiele to Mr Mario Cueva dated 20 th June 2006- 
marked 1-SG. 

2. Letter from late Mr Lohia Raka to Ms Hitelai Polume-Kiele dated 13 June 
2006 marked 2 - SG. 

3. COI letter to the Acting Solicitor General and copied to Ms Kiele and Mr 
Augerea dated 17 th September 2008. Marked 3 - COI. 

4. The search results provided by Mr Augerea - marked 4 — NCR. 

5. Letter dated 20 June 2006 by former Registrar, late Lohia Raka - marked 5- 
NCR. 

6. Letter from Commission of Inquiry to Augerea, Kiele and Court Reporting - 
marked 6 - COI. 

7. Writ of Summons - Marked 7 - NCR. 

8. Affidavit of Service - Marked 8 - NCR. 

9. Court Order - Marked 9 -NCR. 

10. Affidavit of Service - Marked 10 - NCR. 

11. . Consent Order - Marked 11 - NCR. 

12. Certificate of Judgment - marked 12 - NCR. 

13. Deed of Release - Marked 13 - NCR. 

14. Letter dated 4 th October 2005 - Marked 14 - NCR. 

15. Letter from Makap Lawyers dated 7 th October 2008 - marked 15 - COI. 

16. COI letter to Manu & Associates Lawyers dated 6 th October 2008 - marked 16 
— COI. 

17. Letter from Mr Manu is dated 7 th October 2008 - marked 17 - COI. 

1 8. COI letter to Mr Cooper dated 7 th October 2008 - Marked 18 - COI. 

19. National Court registry data entry pro- forma - marked 19 - NCR. 

20. Court file cover confirming production of supplementary court file - Marked 
20-NCR. 



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21. Letter from Makap Lawyers to Registrar dated 12 June 2008 - 
marked 21 - NCR. 

22. Letter dated 12 March 2007 - Marked 22 - SG. 

23. Affidavit of Ben Babat - marked 23 - SG. 

24. Copy of the Solicitor General file creation instructions sheet - Marked 24-SG 

25. Letter from Wesley Aisora to Solicitor General dated 25 August 2008 — 
marked 25 — SG. 

26. Letter from Kakaraya Lawyers to Finance Department dated 1 st March 2006 - 
marked 26 - SG. 

27. Notice of Change of Lawyers filed by Kakaraya Lawyers on 3 rd March 2006 - 
marked 27 - NCR. 

28. Letter from Kakaraya Lawyers to Registrar dated 13 June 2006 - marked 28 - 
SG 

29. Letter from Kakaraya Lawyers to Solicitor General dated 15 August 

2006 - marked 29 - SG. 

30. Letter from Kakaraya Lawyers to Solicitor General dated 26 February 

2007 - marked 30 - SG (binded document). 

31. Letter from Gevame J Namane, Acting Registrar, Goroka National Court 
registry to Solicitor General dated 16 February 2007 - marked 31 - SG 

32. Telephone attendance record between Tindiwi & Kakaraya dated 14 March 
2007 - marked 32 - SG. 

33. Letter from Pauline Nuau, Finance Department to Solicitor General dated 5 th 
December 2007 - marked 33 - SG. 

34. Letter from Kakaraya Lawyers to Solicitor General dated 19 August 2007- 
marked 34-SG 

35. Letter from Kakaraya Lawyers to Solicitor General dated 31 December 2007 
— marked 35 — SG. 



331 



36. Letter from Kakaraya Lawyers to Finance Department dated 31 December 
2007 - marked 36 - SG. 

37. Letter from Wesley Aisora to Kakaraya Lawyers dated 27 February 2008- 
marked 37-SG. 

38. Authority & Direction from Wesley Aisora to Amnol & Company Lawyers 
dated 28 February 2008 - marked 38 - SG. Authority & Direction from Wesley 

39. Aisora to Finance Department dated 28 February 2008 - marked 39 - SG. 
Letter from Amnol & Company Lawyers to Finance Department dated 28 

40. February 2008 - marked 40 - SG. 

Letter from Wesley Aisora to Solicitor General dated 3 rd March 2008 

41. — marked 41 -SG. 

Letter from Amnol & Company Lawyers to Solicitor General dated 4 th June 

42. 2008 - marked 42 - SG. 

Letter from Wesley Aisora to Amnol & Company Lawyers dated 10 th June 2008 

43. - marked 43 - SG. 

Letter from Makap Lawyers to Solicitor General dated 19 th June 2008 

44. - marked 44 - SG. 

Notice of Change of Lawyers filed by Makap Lawyers on 19 June 2008 - 

45. marked 45 - SG. 

Letter from Makap Lawyers to Solicitor General dated 11 th August 2008 - 

46. marked 46 - SG. 

Letter from Solicitor General to Makap Lawyers dated 3 rd September 2008- 

47. marked 47-SG 

Handwritten memo to Ms Tindiwi, Solicitor General's Office from Paul 

48. Kamakande (undated) - marked 48 - SG. Handwritten note to Mr Devete, 
Solicitor General Office from Dan Kakaraya (undated) - marked 49 - SG. 

49 Copy of the document (letter) from Mr Augerea in response to our enquiries - 

marked 50 - NC. 
50 



332 



Copy of the National Court file cover confirming that W.S 754 of 2000 is for 
the matter Steamships Ltd -v- South Pacific Builders Ltd - marked 51-NC. 



333 



Ben Noel 

Parties 

(i) For the State: 

(a) Police 

(b) Attorney General/ Solicitor General 

(ii) For the Claimant: 

(a) Ben Noel 

Matter 

> Claim for malicious prosecutions 

> Two writ of summons filed for the same cause of action 

> Both proceedings were head together before the National Court 

> Following a full hearing, National Court awarded K45, 000.00 inclusive 
of costs. Interests to be calculated at 8 % 

> Despite the National Court award, proceedings were again setded for 
K850.000.00 

> K150, 000.00 paid so far 



Recommended Findings 

> No basis for the out of court settlement as the matter was determined by 
the National Court 

> Fraud 



334 



Attached herewith is the copy of the Terms of Reference. This is a case which falls 
within the terms of the reference of this inquiry. 

D. Documents and investigations conducted at : 

• National Court 

• Office of the Solicitor General 

• Finance Department 

E. Brief Facts / Evidence 

1. Ben Noel a local business man in Goroka made two civil claims against three police 
officers and the State. By Writ of Summons and statement of claim filed on 3 
September 2001, described as WS 1269 of 2001, Mr Noel sought damages for having 
being wrongfully arrested and detained for a period of 35 days from 26 July 1999 to 
31 August 1999. 

2. Then on 21 January 2002, Mr Noel filed another Writ of Summons and statement of 
claim in proceedings WS 46 of 2002 against the same defendants, claiming damages 
for defamation, false imprisonment and malicious prosecution, in relation to the same 
facts and allegations of wrongful arrest. 

3. On 26 April 2002, the National Court entered default judgment against all the 
defendants, including the State in proceedings WS 1269 of 2001. In relation to WS 46 
of 2002, although Mr Noel filed an application for default judgment, Mr Noel's lawyer 
withdrew that motion because both parties had consented to the merger of 
proceedings WS 1269 of 2001 and WS 46 of 2002 because they arose from the same 
facts. 

4. Orders for consolidation of those proceedings was endorsed by the Court 

on 10 October 2003. After a contested hearing on the assessment of 

335 



damages, the National Court published a written decision on 26 April 2004 assessing 
Mr Noel's damages at K40,000.00 and awarded costs at K5,000.00 and interest. 

5. Almost two (2) months later on 9 June 2004 Mr Ben Noel entered into a deed of 
release in the sum of K850,000 with Mr Francis Kuvi as Solicitor General on behalf of 
the State. Finance Department records reveal that a total of Kl 50,000 has been paid to 
Mr Noel on 6 July 2005 in one cheque payment. 

6. The following persons were called to give evidence in respect of the matter. They are 
Ben Noel, Francis Kuvi and Alois Kintau. 

Evidence of Ben Noel 

7. Ben Noel appeared before the Commission and confirmed that he was well aware of 
the decision of the National Court awarding him K45, 000.00. He then attended at the 
Solicitor General's Office and commenced discussions with Mundua Kua and Francis 
Kuvi. He confirmed that Francis Kuvi was well aware of the decision by the National 
Court. They (Kuvi/ Noel) agreed to setde for K850, 000.00. Ben Noel was confident 
and appeared to be aware of the issues that arouse from the claim. 

Evidence by Francis Kuvi 

8. Francis Kuvi appeared before the Commission and was advised of the evidence by 
Ben Noel and responded that he would like to respond in writing to the issues that 
arouse in light of the evidence by Ben Noel. A statement was received from Francis 
Kuvi dated 17 June 2009. 

9. Mr Kuvi confirmed that he had appeared at the National Court during trial 

on assessment of damages but stated that a junior lawyer could have 

336 



appeared to received the Court's decision. However, Mr Kuvi contradicted himself by 
stating that he was no sure if a decision was made. 

10. In essence, Francis Kuvi was very much aware of the matter proceedings to trial on 
assessment of damages yet proceeded to setde the matter for K850, 000.00 in direct 
defiance (contempt) of the National Court order. In his statement, Mr Kuvi has 
attempted to deny that he had signed the deed of setdement. It is clear from Mr 
Kuvi's evidence and that of Ben Noel that Francis Kuvi was instrumental in the 
signing of the deed of release. 

1 1 . Mr Kuvi's actions amount to serious ethical issues that warrant referral to the Lawyers 
Statutory Committtee and the Police for further investigations and possible charges to 
be laid. 

E. Recommended Finding(s) 

1. No lawful basis for the settlement by deed of release. 

2. An act to defraud the State. Fraud. 

3. Francis Kuvi's actions amount to. serious unprofessional conduct as a lawyer and an 
act to defraud the State as he knew very well that the matter had already been 
determined by the National Court. 

4. Ben Noel's actions amount to an act to defraud the State as he also knew that his 

matter(s) were already determined by the National Court. 

F. Recommendations 

1. Francis Kuvi be referred to the Lawyers Statutory Committee and the Police for 
further investigations and possible charges. 



337 



2. Ben Noel be referred to the Police for further investigations. 

3. Attorney General (Solicitor General) immediately file court proceedings and set aside 
the deed of setdement and seek recovery of the monies paid to Ben Noel. 

4. Finance Department immediately cease any further payments in respect of this matter. 



338 



(i) IBK (PNG) Ltd A. 
Parties 

(i) For the State: 



(a) Finance Department 

(b) Attorney General/Solicitor General 

(c) National Court Registry 

(ii) For the Claimant: 

(a) IBK (PNG) Ltd 

B. Brief facts /evidence 

1 . This is a matter where we do not have any documents (at all) to identify the facts or 

circumstances leading to the alleged claim. All we have on file are following 
documents, they are:- 

(i) Letter from Ms Hitelai Polume-Kiele to Mr Mario Cueva dated 20 th 

June 2006; marked 1 - SG. 

(ii) Letter from late Mr Lohia Raka to Ms Hitelai Polume-Kiele dated 13 
June 2006; marked 2 - SG. 

(iii) COI letter to the Acting Solicitor General and copied to Ms Kiele and 
Mr Augerea dated 17 th September 2008. Marked 3 -COI. 

2. Commissioners, it appears the claimant IBK (PNG) Limited allegedly obtained a 

Court Order for Kl,900,000.00 on 18 October 2002 and submitted the said 
Order to the Finance Department for payment. It 



339 



appears the letter from Ms Kiele to Mr Cueva was prompted by the fact that 
Mr Cueva may have sought instructions or clearance from the Solicitor General 
in relation to the said Order. 

After checking records at the Solicitor General's office, Ms Kiele may 
have written to the National Court . Registry to confirm with their 
records also. The letters from Ms Kiele and Mr Augerea state there 
are no records (at all) of such a case/matter in the Solicitor General's 
file and the National Court Registry respectively. 

I Investigations at the companies registry (IP A) confirm that there is 
no company registered under the name IBK (PNG) Ltd however 
there is a company registered as IBK Stationary Supplies (PNG) Ltd'. 
The Company ceased to operate on 21 st April 2006 as being the date 
it was deregistered. 

Marked with c 4 — IP A' is the Company Extract of the said Company, 
IBK Stationary Supplies (PNG) Ltd obtained from the IPA, 
Company Registry. 

Following issuing of the Summons, the following persons brought 
with them certain information/documents on Monday, 6 th October 
2008 vital to our investigations, they are:- 



® 

(ii) 



Mr Ian Augerea, Registrar National Court; 
Ms Hitelai Polume-Kiele, Acting Secretary; Department of 
Justice & Attorney General; 
Mr Mario Cueva, Finance Department; and 
(lif) M f Augerea has confirmed in writing that the National Court 
A Registry does not have a file registered under the said name 

IBK PNG Ltd -v- The State, essentially confirming the 



340 



contents of the letter from the late Mr Lohia Raka (marked 2 - SG) in 

regard to this matter. 

Marked '5 - NCR' is the copy of the note/document produced by Mr 

Augerea. 

7. Ms Kiele confirmed the contents of the letter dated 20 th June 2006 (marked 1- SG) 
and at the same time provided copies of the following documents which we 
did not have (during our initial investigations), they are:- 

(i) letter dated 27 th March 2006 from, Ms Cathy Ali, Finance Department 

to Ms Kiele - marked % - SG; 

(ii) letter dated 21 st March 2003 from the Office of the Solicitor General 
by Mr Zacchary Gelu to Mr Boas Hembehi, Finance Department — 
marked '7 — SG'; 



(iii) Court Order filed and entered on 18 October 2002 - marked '8 - SG'; 
(vi) Certificate of Judgment dated 18 October 2002 - marked '9 - SG'; 



8. The Commission notes from Cathy Ali's letter dated 27 March 2006 that 
when the documents were lodged at the Finance Department, the documents 
were referred back to the Solicitor General seeking clearance and verification 
on the issues raised in the said letter. 

9. Mr Cueva attended the Commission hearing on Wednesday, 8 th September 
2008 and was cross-examined. Mr Cueva confirmed on oath that no payments 
were made in respect of this matter and at the 



341 



same time provided a bundle of documents. These documents were marked as 
Exhibit 5 — DF. 

10. Mr Zacchary Gelu appeared before the Commission on his own will (without 
summons) and gave evidence in respect of the matter. Mr Gelu stated that the 
claim was a fraud stating his reasons amongst others that his signature was 
forged, the format of the letter was different to the one that is used in the 
Solicitor General's Office, his name was spelt incorrecdy and at the material 
time when the letters and the documents were signed (bearing his signature) he 
was no longer the Solicitor General. Mr Gelu said this was a fraud. 

1 1 . Both Ms Kiele and Mr Augerea have confirmed that there is no file registered 
in the National Court Registry and the Office of the Solicitor General. 

12. In the meantime few issues that need to be highlighted are; 

(a) Certificate of judgment does not indicate if the State wishes to take 
further action or the judgment must be satisfied. This is a fatal error; 

(b) Both the Court Order and the Certificate of Judgment are both dated 1 8 
October 2002 and filed 28 February 2003. It can be noted from the 
dates that the same person wrote the dates as they are very identical. 
Furthermore, in the normal course of practice, often (always), the 
Certificate of Judgment is always drafted and filed a day or more after 
the Court Order is obtained. These issues raise serious doubt as 



342 



to the authenticity and legality of these documents. This is a fraud 
(misrepresentation); 

(c) There is no Writ of Summons and other necessary court documents that 
would lead credence to such orders being made. 



13. The Commission has not received any documents or information 

from the claimant, IBK PNG Ltd. The publication of this matter in 
the Newspaper is sufficient notice to the claimant, IBK PNG Ltd. 
There was no appearance for the claimant nor any form of 
communication was received from the claimant. 

Finding(s) 

1 . No Solicitor General file created for this matter. 

2. No court file for this matter. 

3. The issue generally in this case is, how did IBK PNG Ltd obtained a Court Order 

for the sum of Kl .9 million on 1 8 October 2002? As it appears this is a clear 
case of fraud. Those involved in. facilitating of claim must be referred to 
appropriate authorities. Finding of fraud. 



343 



Recommendations 

1. Matter be referred to Police for further investigation to ascertain persons 
behind this claim. 

2. Those National Court Registry staff involved in facilitating the claim by sealing 
the court documents be referred to appropriate authorities for investigation and 
appropriate action to be taken. Likewise, staff(s) at the Attorney General or 
Solicitor General's Office be investigated to ascertain how the letterhead for the 
Office of the Secretary & Attorney General was used to facilitate this fraud. 

3. The letterhead for the Office of the Solicitor General and the Secretary and 
Attorney General be improved with special security features so that it is not 
used without lawful authority. 

4. A different National Court seal with improved security features be used to seal 
court orders and certificate of judgments. 

5. No payments must be made by the Finance Department on this claim. 

6. Solicitor General must take appropriate action to put a stop to this purported 
claim. That is a letter be written to Finance Department to immediately put a 
stop to the claim from being processed. An action/ application be filed in Court 
to set aside the Court Order otherwise it possible that an unsuspecting Officer 
can act on the Court Order. 



344 



7. Apart from the requirement to give Notice under section 5 of the Claims By and 
Against the State Act ('Act"), a provision be included in the said Act make it 
mandatory that:- 

(a) the Registrar of the National Court should after every four (4) months 
(quarterly) provide an up-dated list of all proceedings brought against 
the State. This is to avoid the experience now seen whereby a person 
can collude with Registry official and draft a Court Order without a 
physical file actually created for the matter. The Solicitor General and 
Finance Department can use the list to check against documents 
submitted to their Office for processing; 

(b) the section 5 notice issued to the Attorney General/Solicitor General 
must also be copied to the Principal Defendant, such as in this case 
the Police Commissioner. 

Terms of Reference 

Attached herewith are copies of the Terms of Reference. This is a case which falls 
within the Commission's Terms of Reference. All the terms of reference are relevant 
however, those that apply specifically to this case are those that have being 
highlighted, they are Terms of Reference No. s 1 and 8. 



345 



INDEX TO DOCUMENTS TENDERED AS EVIDENCE 

1. Letter from Ms Hitelai Polume-Kiele to Mr Mario Cueva dated 20 th June 2006; 
marked 1-SG. 

2. Letter from late Mr Lohia Raka to Ms Hitelai Polume-Kiele dated 13 June 
2006; marked 2 - SG. 

3. COI letter to the Acting Solicitor General and copied to Ms Kiele and Mr 
Augerea dated 17 th September 2008. Marked 3 - COI. 

4. Company Extract of IBK (PNG) Ltd - marked 4 - IPA. 

5. Copy of the note/document produced by Mr Augerea — marked 5 - NCR 

6. Letter dated 27 th March 2006 from Finance Department to Ms Kiele — 
marked '6 - SG. 

7. Letter dated 21 st March 2003 from the Office of the Solicitor General by Mr 
Zacchary Gelu to Mr Boas Hembehi, Finance Department - marked 7 - SG. 

8. Court Order filed and entered on 18 October 2002 - marked 8 - SG. 

9. Certificate of Judgment dated 18 October 2002 - marked 9 - SG. 



346 



Besalam Investment Ltd 



A. Parties 




(i) 


For the State: 


(a) 


Police 


(b) 


Attorney General 


(ii) 


For the Claimant: 


(b) 


Besalam Investments Ltd 



B. Matter 

• Alleged police raid 

Judgment entered for K2, 646 000.00 

C. Recommended Findings 

Fraud 

• No court proceedings 

• No Solicitor General file 

D. Terms of Reference 

Attached herewith are copies of the Terms of Reference. This is a case which falls 
within the terms of reference of this inquiry. All the terms of reference are relevant 
and applicable to this case, however, this case falls squarely within Terms of Reference 
No.s'. 1 (i) to (xii) and 5 (i) to (mi). Also attached is the advertisement containing list of 
matters (including this matter) published in newspaper. 



E. Documents and investigations conducted at: 

347 



• Attorney-General (AG) 

• Solicitor-General (SG) 

• Registry of National Court (NC) 

• Department of Finance (Finance) 

F. Brief facts/ Evidence 

1. Besalam Investment Ltd filed proceedings in W.S No. 306 of 2001 against the Police 
and the State for unlawful police raid which resulted in loss of proceedings. 

2. The matter purportedly went to full trial and the National Court awarded the sum of 
K2, 646, 000. 00 inclusive of interest with costs to be taxed if not agreed on 24 th June 
2001. 

3. The Court Order and the Certificate of Judgment was setded and filed on the same 
date 29 th June 2001. Mr Gelu purportedly signed the Certificate of Judgment. On 14 th 
October 2005 Mr Kuvi purportedly wrote to Mr Otto Wangilen to setde the judgment 
debt. 

4. On 4 th May 2006, Ms Polume-Kiele wrote to Mrs Cathy Ali, Finance Department 
stating the purported claim by Besalam Investment Ltd was fraudulent as there were 
no Solicitor General and National Court files for this matter and as such advised that 

no payments be made until further advice. 

G. Findings 

1 . The Claim appears to be a fraud and needs further investigation. 



348 



Recommendations 

1 . The matter be further investigated by the Police. 

2. The Attorney General and the Solicitor General conduct further investigation into 
this matter to ascertain amongst others if a proceedings were actually filed in Court 
and take appropriate action to stop payment. 

3. Finance Department immediately stop payment. Persons following up on the said 
claim be referred to police for investigations. 



349 



(k) John Toa 

A. Parties 

(i) For the State: 

(a) Attorney General 

(ii) For the Claimant: 

(a) John Toa 

B. Matter 

Judgment entered for IC786, 000.00 

C. Recommended Findings 

Fraud 

• No court proceedings 

• No Solicitor General file 



D . Terms of Reference 

Attached herewith are copies of the Terms of Reference. This is a case which falls 
within the terms of reference of this inquiry. All the terms of reference are relevant and 
applicable to this case, however, this case falls squarely within Terns of Reference No.sl 
(i) to (xii) and 5 (i) to (vii). Also attached is the advertisement containing list of matters 
(including this matter) published in newspaper. 



350 



E. Documents and investigations conducted at: 

• Attorney-General (AG) 

• Solicitor-General (SG) 

• Registry of National Court (NC) 

• Department of Finance (Finance) 

F. Brief facts/ Evidence 

1. John Toa filed proceedings in W.S No. 304 of 2001 against the State claiming the sum 
of K786, 000.00 and obtained Orders for the said amount on 14 th June 2001 and 
submitted the Order to the Finance Department for setdement. As a result on 24 th 
March 2006, Finance Department wrote to the Solicitor General to verify the 
authenticity of the claim. 

2. On 20 th June 2006 Ms Polume-Kiele wrote to Mr Mario Cueva, Finance Department 
stating the purported claim by John Toa was fraudulent as there were no Solicitor 
General and National Court files for this matter and as such advised that no payments 
be made until further advice. Because there are no documents such as the writ of 
summons we are not able to ascertain the nature of claim. 

G. Findings 

2. The Claim appears to be a fraud and needs further investigation. 

I. Recommendations 

1 . The matter be further investigated by the Police. 



351 



2. The Attorney General and the Solicitor General conduct further investigation into this 
matter to ascertain amongst others if a proceedings were actually filed in Court and 
take appropriate action to stop payment. 

3. Finance Department immediately stop payment. Persons following up on the said 
claim be referred to police for investigations. 



352 



(1) Dick Teman 
A. Parties 

(i) For the State: 

(a) Finance Department 

(b) Attorney General/ Solicitor General 

(c) National Court Registry 

(d) Police Department 

(ii) For the Claimant: 

(a) Dick Teman 

B. Brief Facts/Evidence 

1 . This is a matter where we do not have any documents (at all) to identify the facts or 
circumstances leading to the alleged claim. All we have on file are following 
documents, they are:- 

(i) Letter from Ms Hitelai Polume-Kiele to Mr Mario Cueva dated 20 th June 

2006. 

(ii) Letter from late Mr Lohia Raka to Ms Hitelai Polume-Kiele dated 13 
June 2006. 

(iii) COI letter to the Acting Solicitor General and copied to Ms Kiele and 
Mr Augerea dated 17 th September 2008. 



353 



The claimant Dick Teman is alleged to have obtained a Court Order for 
K3,600,000.00 on 14 th July 2005 and submitted the said Order to the Finance 
Department for payment. It appears the letter from Ms Kiele to Mr Cueva was 
prompted by the fact that Mr Cueva may have sought instructions or clearance 
from the Solicitor General in relation to the said Order. 

The letters from Ms Kiele and Mr Augerea state there are no records (at all) of 
such a case/matter in the Solicitor General's Office and the National Court 
Registry respectively. 

Following issuing of the Commission Summons, the following persons brought 
with them certain information/documents on Monday, 6 th October 2008 vital to 
the Commission's investigations, they are:- 

(i) Mr Ian Augerea, Registrar National Court; 

(ii) Ms Hitelai Polume-Kiele, Acting Secretary; 

(iii) Mr Mario Cueva, Finance Department; and 

(iv) Mr Francis Kuvi. 

Mr Augerea has confirmed in writing that the National Court Registry does not 
have a file registered under the said name Dick Teman — v- The State, 
essentially confirming the contents of letter from the late Mr Lohia Raka 
(marked 2 — SG) in regard to this matter. 



354 



Marked <4 - NCR' is the copy of the note/ document produced by Mr 
Augerea. 

6. Ms Kiele confirmed the contents of the letter dated 20 th June 2006 (marked 1- SG) 
and at the same time provided copies of the following documents which we did 
not have (during our initial investigations), they are:- 

(i) letter dated 7 th March 2006 from Finance Department to Ms Kiele - 
marked '5 - SG'; 

(ii) letter dated 17 th August 2005 from the Office of the Secretary & Attorney 
General by Mr Francis Kuvi to Mr Boas Hembehi, Finance Department 
— marked '6 - SG'; 

(iv) Court Order of 1 4 July 2005 - marked '7 - SG; 

(v) Certificate of Judgment dated 1 st August 2005 - marked '8 - SG 

The Commission notes that when the documents were submitted with the Finance 
Department for payment, Mr Otto Wangilen, Finance Department wrote to Ms Kiele 
on 7 th March 2006 seeking verification as it appeared that 
Mr Kuvi's signatures were scan ned. The Commission also notes that the 

purported letter written by Mr Kuvi to Finance Department on 1 7 August 2005 was 
written under the letterhead of the Office of the Secretary & Attorney General. In this 
case, it should have been written under the letterhead of the Office of the Solicitor 
General. 



9. Mr Cueva attended the Commission hearing on 

Wednesday, 8 th 

September 2008 and was cross-examined. Mr Cueva confirmed on 



355 



oath that no payments were made in respect of this matter and at the same time 
provided a bundle of documents. These documents were marked as Exhibit 4 - DF. 

10. From the letter purportedly written by Mr Kuvi (marked 5 - SG), it appears the claim 
was allegedly for unlawful police raid which resulted in destruction of properties. 

11. Mr Kuvi gave evidence on 17 March 2009 and denied having any knowledge of this 
matter. He stated that his signature was forged. Mr Kuvi's evidence is crucial as his 
signature appears on the Certificate of Judgment and the letter to Finance Department 
giving clearance for setdement of the claim. 

11. We did not receive any documents or information from the claimant Dick 
Teman. It is submitted that there was sufficient publicity of this claim by way of 
advertisement and that it was incumbent on the claimant to come forward and 
assist the Commission. He has not done so. 

12. As it is, both Ms Kiele and Mr Augerea have confirmed that there is no file 
registered in the National Court Registry and the Office of the Solicitor General. 
Further, Mr Kuvi has denied any knowledge of this claim. 

C. Finding(s) 

1 . No Solicitor General file created for this matter. 

2. No Court files for this matter. 

3. The issue generally in this case is, how did Dick Teman obtain a Court Order 
for the sum of K3.6 million on 14 July 2005? As it appears this 



356 



is a clear case of fraud. Those involved in facilitating this claim must be referred 
to appropriate authorities. 



Recommendations 



Dick Teman be referred to Police for investigation and such other action to be 
taken where necessary. 

Those National Court Registry staff involved in facilitating the claim by sealing 
the court documents be referred to appropriate authorities for investigations and 
actions to be taken. Likewise, staff at the Attorney General or Solicitor General's 
Office be investigated to ascertain how the letterhead for the Office of the 
Secretary & Attorney General was used to facilitate this fraud. 

The letterhead for the Office of the Solicitor General and the Secretary and 
Attorney General be improved with special security features so that it is not 
used without lawful authority. 

A different National Court seal with improved security features be used to seal 
Court Orders and certificate of judgments. 

No payments must be made by the Finance Department on this claim. 

Solicitor General must take appropriate action to put a stop to this purported 
claim. That is a letter be written to Finance Department to immediately put a 
stop to the claim from being processed. An action/ application be filed in Court 
to set aside the Court Order otherwise it possible that an unsuspecting Officer 
can act on the Court Order. 



357 



7. Apart from the requirement to give Notice under section 5 of the Claims By and Against 
the State Act ('Act'), a provision be included in the said Act make it mandatory 
that:- 

(a) the Registrar of the National Court should after every four (4) months 
(quarterly) provide an up-dated list of all proceedings brought against the 
State. This is to avoid the experience now seen whereby a person can 
collude with registry 7 officials and draft a Court Order without a physical 
file actually created for the matter. The Solicitor General and Finance 
Department can use the list to check against documents submitted to 
their Office for processing; 

(b) the section 5 notice issued to the Attorney General/ Solicitor General 
must also be copied to the Principal Defendant, such as in this case the 
Police Commissioner. 

Terms of Reference 

Attached herewith are copies of the Terms of Reference. This is a case which falls within 
the Commission's Terms of Reference. All the terms of reference are relevant however, 
those that apply specifically to this case are those that have being highlighted, they are 
Terms of Reference No.s 1 and 8. 

INDEX TO DOCUMENTS TENDERED AS EVIDENCE 

1 . Letter from Ms Hitelai Polume-Kiele to Mr Mario Cueva dated 20 th June 2006; 
marked 1 - SG. 



358 



5. Letter from late Mr Lohia Raka to Ms Hitelai Polume-Kiele dated 13 June 2006; 
marked 2 - SG. 

6. COI letter to the Acting Solicitor General and copied to Ms Kiele and Mr 
Augerea dated 17 th September 2008. Marked 3 - COL 

4. Marked '4 - NCR' is the copy of the note/ document produced by Mr Augerea. 

5. Letter dated 7 th March 2006 from Finance Department to Ms Kiele - marked '5 
-SG'. 

6. Letter dated 17 th August 2005 from the Office of the Secretary & Attorney 
General by Mr Francis Kuvi to Mr Boas Hembehi, Finance Department — 
marked '6 - SG'. 

7. Court Order of 14 July 2005 - marked 7 - SG'; 

8. Certificate of Judgment dated 1 st August 2005 - marked '8 - SG' 



359 



(m) John Jaintong 
A. Parties 

(i) For the State: 

(a) Finance Department 

(b) Attorney General/ Solicitor General 

(c) National Court Registry 

(d) Bougainville Interim Government 

(e) PNG Harbours Board 

(ii) For the Claimant: 

(a) J ohn J aintonG 

(b) Joseph Bare Onguglo 

B. Terms of Reference 

Attached herewith are copies of the Terms of Reference. This is a case which falls 
within the Commission's Terms of Reference. All the terms of reference are relevant 
however, those that apply specifically to this case are those that have being highlighted, 
they are Terms of Reference No.s 1 and 8. 

C. Introduction 

1 . This matter came before the Commissioners on Wednesday, 8 October 2008 and the matter 
was called with brief facts presented. The matter was subsequendy adjourned to allow 
parties with interest to come forward and 



360 



provide response in respect of the matter. Initially, there were no documents (at all) to 
identify the full facts or nature of claim leading to the alleged claim. All we had on file 
were the following documents, they are:- 

(i) letter from Ms Hitelai Polume-Kiele to Mr Mario Cueva dated 20 th June 2006; 

marked 1 - SG. 
(ii) letter from late Mr Lohia Raka to Ms Hitelai Polume-Kiele dated 13 June 

2006; marked 2 - SG. 
(iii) COI letter to the Acting Solicitor General and copied to Ms Kiele and Mr 

Augerea dated 17 th September 2008. Marked 3 - COI. 

2. Commissioners, it appears the claimant John Jaintong allegedly obtained a court order 
for IC1, 347, 703. 20 on 21 « October 2001 and submitted the said order to the 
Finance Department for payment. It appears the letter from Ms Kiele to Mr Cueva 
was prompted by the fact that Mr Cueva sought instructions or clearance from the 
Solicitor General in relation to the said court order. 

3. After checking records at the Solicitor General's office, Ms Kiele wrote to the 
National Court registry to confirm with their records also. The letters from Mr 
Augerea and Ms Kiele state there are no records (at all) of such a case/ matter in the 
Solicitor General's file and the National Court registry. 

4. Following issuing of the Summons, the following persons responded to the summons 
and brought with them certain information/ documents on Monday, 6 th October 
2008 vital to our investigations, they are:- 

(i) Mr Ian Augerea, Registrar National Court; 

(ii) Ms Hitelai Polume-Kiele, Acting Secretary; 
(iii) Mr Mario Cueva, Finance Department; and 



361 



(iv) Mr John Jaintong, Plaintiff 

5. A Mr Augerea has confirmed in writing that the National Court Registry does 

not have a file registered under the said name John Jaintong -v- The State, I essentially 
confirming contents of letter from late Mr Lohia Raka (marked 2 \ - SG) in regard to 
this matter. 
Marked £4 - NCR' is the copy of the note/ document produced by Mr Augerea. 

6. Ms Kiele confirmed the contents of the letter dated 20 th June 2006 (marked 1- SG) 
and at the same time provided copies of the following documents, they are:- 

(i) letter dated 8 th March 2006 from Finance Department to Ms Kiele - marked £5 

-SG; 
(ii) letter dated 14 th October 2005 from the Office of the Solicitor General by Mr 

Francis Kuvi to Mr Gabriel Yer, Finance Department - marked % - SG; 
(iii) Court Order filed and entered on 21 st October 2001 - marked £7 - 
SG; 

Certificate of Judgment dated 21 st October 2001 - marked '8 - SG; 

Deed of Release made on 12 th October 2005 - marked '9 - SG; 

Certificate issued by Martin Miriori dated 28 August 1996 - marked '10 - SG. 

7. Mr Cueva attended hearing on Wednesday, 8 th September 2008 and was cross- 
examined. Mr Cueva confirmed on oath that no payments were made in respect of this 
matter and at the same time provided a bundle of documents. These documents were 
marked as Exhibit 4 - DF. Essentially, the documents are similar to those provided by 
Ms Kiele, 



362 



however, what is important in respect of Mr Cueva's evidence before the Inquiry is 
that he has confirmed that no payments have been made. 

Mr John Jaintong was also present on Wednesday, 8 th September 2008 and advised to 
do a statement in relation to this matter. Marked '11 - COI' is a copy of the Contact 
Details Form filled in by Mr Jaintong. 

On 1 5 th October 2008, Mr John Jaintong provided the following documents, they 

are:- 

(i) letter from Mr John Jaintong dated 14 October 2008 to Mr Kassman -marked 

'12 -COP; 
(ii) Index of documents (Attached Folio attached to John Jaintong's letter - 

marked '13 - COI'; 
(iv) Deed of Release dated 5 th July 2005 - marked '14 - COI'; 
(v) Letter from Solicitor General, Mr Francis Kuvi to Mr Thaddeus Kambanei, 

Finance Department dated 8 th July 2005 - marked '15 - COI'; 
(vi) Letter from John Jaintong to Mr Thaddeus Kambanei, Finance Department 

dated 25 th August 2005 - marked '16 - COI'; 
(vii) Letter from John Jaintong to Acting Secretary, Finance Department dated 12 th 

May 2006 - marked '17 - COI'; 
(viii) Unsigned Agreement between John Jaintong and Joseph Bare Onguglo dated 

19 May 2006 - marked '18 - COI'; 
(ix) Memorandum of Understanding between Joseph Bare Onguglo, Kevin S 

Yalkwien and Michael Konjib dated 01 st February 2005 - marked '19 - COI'; 
(x) Unsigned letter by John Jaintong to Mr Gabriel Yer dated 22 May 2006 - 

marked '20 - COI'; 
(xi) Hand Written note by Joseph Bare Onguglo to Finance Department dated 19 

May 2006 -marked '21 - COP; 



363 



(xii) Letter from John Jaintong to Chairman Commission of Inquiry dated 
21 « October 2008 - marked '22 - COI'. 

10. Further, on the 18 th October 2008, one Namba Yosi Ososo (interested I 

person) provided a hand written statement. He claims to be a witness for 
John Jaintong. Essentially he alleges that Joseph Onguglo was involved in 
facilitating the claim for payment (para.2 & 4). He also makes reference to 
his meeting(s) with one Michael Konjib. He alleges that Mr Konjib's J 
brother in-law who was the State Solicitor at that time facilitated the claim J 
(para. 6). He states at paragraph 7 (quote), '..J have been the prime witness for \ 
this matter but have no idea any of any court proceedings at Waigani National Court 
relating to the State v John Jaintong. If there was such courtproceedings I should be called 
upon witness. ' 

11. Namba Yosi Ososo's letter/ statement dated 18 th October 2008 is marked 

'23 - cor. 



The letter from Mr Francis Kuvi, Solicitor General to Mr Thaddeus 
Kambanei, Finance Department dated 8 th July 2005 indicates that the case 
relates to some consultancy work allegedly undertaken by John Jaintong. 



13. Briefly, Mr Kuvi states in the letter that the claim is by 
Joseph Bare Onguglo, who is claiming for outstanding 
fees for consultancy services * provided by himself and 
or by his agent, one John Jaintong to the Bougainville 
Special Task Force which was specifically setup by the 
National Government at the material time to initiate, 
develop and negotiate the peace process in Bougainville. 



14. Mrjaintong states at paragraph 12 of his letter dated 21 st October 2008 marked 22 - COI (quote), 
" ..The letters written by the promoters of this scam for my signature is an attempt to implicate me and is 
attached as per ¥ olio 7, 8 and 9 



15. Mr Jaintong further states in the said letter that the deed of release together with the 
court order was done without his knowledge, (see paragraphs 10 & 13 of the said 
letter). 

16. On 19 May 2006 (marked 21 - COI), Joseph Bare Onguglo wrote a letter to the Finance 
Department, Attention FAS <&As Public Accounts stating (quote), "...This letter is to inform jou of 
my formal withdrawal to the above said financial claim. It is my intention to withdraw formally to allow 
the incumbent Mr John Jaintong to proceed with the above claims forpayment. Your kind attention to 
this regard is highly appreciated. Yours faithfully, Onguglo, Joseph Hare (Mr), 19 May 2006. " 

17. As it is, Commissioners, both Ms Kiele and Mr Augerea have confirmed that there is 
no file registered in the National Court registry and the Office of the Solicitor General. 
This is further confirmed by Mr Jaintong (himself) that he denied having any 
knowledge of the deed of release and the court order. 

1 1 . John Jaintong appeared and confirmed that he was not aware of the court proceedings and 

that someone had used his name in an act to defraud the State. Jaintong confirmed that he 

provided consultancy services to the State during the Bougainville crisis in his personal capacity 

and was not engaged // by Joseph Bare Onguglo and his Black Action Party. He confirmed T|/ 

submitted a claim and was still following up on the claim. He confirmed h / that he is yet to be 

paid. 



365 



12. In support of Jaintong's evidence, Namba Yosi Ososo was called by Jaintong and 
essentially corroborated the evidence of Jaintong. 

13. Joseph Bare Onguglo was called and gave evidence. Mr Onguglo maintained that 
Jaintong was engaged by his party and all expenses was paid for by his party as such he 
was the rightful claimant. He was asked to provide copies of receipts or proof 
payments, etc but failed to provide those information. He confirmed that a deed of 
setdement was signed by him and Mr Francis Kuvi to settle the claim and was yet to 
be paid. He denied having issued court proceedings under John Jaintong's name. 
Asked about Kuvi's evidence that he denied signing the deed of release, he maintained 
that Kuvi was telling lies or may have forgotten. 



14. Francis Kuvi was called to confirm evidence by Onguglo if he had actually entered into a 
deed of release with Onguglo. Francis Kuvi denied signing a deed of release in this 
matter with Onguglo. Asked if he was telling the truth and he said, he knows Onguglo 
well and that he was a former MP and any matter involving Onguglo (as it is in this 
case) he would recall clearly. He denied ever signing the deed of release with Onguglo 
nor did he have any knowledge of this claim. Asked if his signature may have been 
forged, he answered it appears to be. 



C. Finding(s) 

1 5 The issue generally in this case is, how did John Jaintong obtain a court 

order for the sum of Kl, 347, 703. 20 on 21 st October 2001? As it appears 
this is a clear case of fraud. Those implicated must be referred to the Police 
and appropriate authorities for investigation. 



366 



16. Francis Kuvi's name and signature was used to advance this claim and as such appears 
to be a fabrication. Matter be referred to Police for further investigation. 

17. This is not a genuine claim. 
D. Recommendations 

18. Matter be referred to Police for further investigations. 

19. Francis Kuvi, John Jaintong and Joseph Bare Onguglo be referred to Police for 
further investigations. 

20. Attorney General (Solicitor General) take appropriate action immediately put a stop 
concerning claims by Joseph Bare Onguglo and John Jaintong concerning this matter. 

21 . Finance Department must not make any payments. 
INDEX TO DOCUMENTS TENDERED AS EVIDENCE 

1 . Letter from Ms Hitelai Polume-Kiele to Mr Mario Cueva dated 20 th June 2006; marked 1 - 
SG. 

7. Letter from late Mr Lohia Raka to Ms Hitelai Polume-Kiele dated 13 June 2006; 
marked 2 - SG. 

8. COI letter to the Acting Solicitor General and copied to Ms Kiele and Mr Augerea 
dated 17 th September 2008. Marked 3 - COL 

4. Marked '4 - NCR' is the copy of the note/ document produced by Mr Augerea. 

5. Letter dated 8 th March 2006 from Finance Department to Ms Kiele - marked '5 - 
SG'. 



367- 



6. letter dated 14 th October 2005 from the Office of the Solicitor General by Mr Francis 
Kuvi to Mr Gabriel Yer, Finance Department - marked c 6 - SG'; 

7. Court Order filed and entered on 21 st October 2001 - marked 7 - SG; 

8. Certificate of Judgment dated 21 st October 2001 - marked '8 - SG; 

9. Deed of Release made on 12 th October 2005 - marked '9 - SG; 

10. Certificate issued by Martin Miriori dated 28 August 1996 - marked '10 - 
SG'. 

1 1 . Marked '11 - COI' is a copy of the Contact Details Form filled in by Mr Jaintong. 

12. Letter from Mr John Jaintong dated 14 October 2008 to Mr Kassman - marked '12 - 

cor. 

13. Index of documents (Attached Folio attached to John Jaintong's letter - marked'13- 

cor. 

14. Deed of Release dated 5 th July 2005 - marked '14 - COI'. 

15. Letter from Solicitor General, Mr Francis Kuvi to Mr Thaddeus Kambanei, Finance 
Department dated 8 th July 2005 - marked '15 - COI'. 

16. Letter from John Jaintong to Mr Thaddeus Kambanei, Finance Department dated 25 th 
August 2005 - marked '16 - COI'. 

17. Letter from John Jaintong to Acting Secretary, Finance Department dated 12 th May 
2006 - marked '17 - COI'. 

18. Unsigned Agreement between John Jaintong and Joseph Bare Onguglo dated 19 May 
2006 - marked '18 - COI'. 

19. Memorandum of Understanding between Joseph Bare Onguglo, Kevin S Yalkwien 
and Michael Konjib dated 01 st February 2005 - marked '19 - COI'. 

20. Unsigned letter by John Jaintong to Mr Gabriel Yer dated 22 May 2006 - marked '20 - 
COI'. 

21. Hand Written note by Joseph Bare Onguglo to Finance Department dated 19 May 
2006 -marked '21 - COI'. 



368- 



'.. Letter from John Jaintong to Chairman Commission of Inquiry dated 21 st October 

2008 - marked '22 - COP. 
>. Namba Yosi Ososo's letter/ statement dated 18 th October 2008 is marked '23 - 

cor. 



369- 



( Rex 

n Leo 



(i) For the State: 

(a) Police 
E. 

(b) Attorney General 
(ii) For the Claimant: 

(a) Rex Leo 

(b) Godwin Lawyers 



B. Matter 



Police raid. 

Judgment entered by default judgment for K2.5 million (no trial conducted) 
Payment made in full to Godwin Lawyers 



Finding s 

2. 



Fraud 

No Police raid 

No court proceedings 

No Solicitor General file 



D. Terms of Reference 



Attached herewith are copies of the Terms of Reference. This is a case which falls 
within the terms of reference of this inquiry. All the terms of 



reference are relevant and applicable to this case, however, this case falls squarely 
within Terms of Reference No.s'. 1 (i) to (xii) and 5 (i) to (mi). Also attached is the 
advertisement containing list of matters (including this matter) published in 
newspaper. 

Documents and investigations conducted at: 

• Attorney-General (AG) 

• Solicitor-General (SG) 

• Registry of National Court (NC) 

• Department of Finance (Finance) 

Brief facts / Evidence 

A Court Order was obtained on 24 October 2002 for the sum of K2.5 million 
inclusive of interest and costs. Both Court Order and the Certificate of Judgment 
were ordered and filed on the same day. The claim appears to relate to an unlawful 
police raid resulting in destruction of properties and judgment was obtained by 
default. 

On 4 th January 2005, Mr Francis Kuvi wrote Mr Hembehi advising that a default 
judgment was obtained in the said amount and requested setdement of the claim. In 
the letter, Mr Kuvi stated (quoted) ;- 

". ..I refer to the above matter and advice that the claim isfor damages and destruction to property 
following an alleged police raid. Proceedings were instituted in the Waigani National Court and the 
default judgment was obtained against the Police and the State for a total amount ofK2, 500, 000.00 
inclusive of interest and cost in thisproceeding " 



371- 



This matter involves an alleged Police raid wherein proceedings were instituted for loss 
of property, etc. The matter never went to full trial but judgment was entered by 
default. In the normal course of practice, in matters such as this, the Courts will enter 
default judgment with damages to be assessed. The Court will enter default judgment 
for the amount claimed only where it is a liquidated claim. This was a claim seeking 
damages that would require assessment in accordance with the Rules of the Court. 

The Plaintiffs never named the alleged tort-feasors. The Police Commissioner or 
Police Commander or the relevant Police Officers allegedly involved never named. 
State was the o nly De fendantjaamed in the court proceedings. The State is only a 
nominal Defendant and cannot be held responsible for actions of some unknown 
persons. Further, it appears the matter was dealt with "haste" in that the Court Order 
and the Certificate are both dated and filed on the same day. 

Furthermore, the Solicitor General is required to indicate by whether (a) judgment will 
be satisfied or (b) the State proposes to take further action. This is a fatal error as the 
Certificate of Judgment is deemed to be a nullity. The rules require the Solicitor 
General to indicate the State's position in respect of the matter by crossing off (a) or 
(b) in the Certificate of Judgment. 

The signatures of the Registrar and the Solicitor General appear to have been scanned 
and pasted as they are all identical both in the Court Order and the Certificate of 
Judgment. Clearly this is a cut and paste job. This needs to be further investigated. ~ 



Godwin Lawyers filed Notice of Change Lawyers on 12 May 2005 and thereon acted 
for the Plaintiffs. 



372- 



On 19 June 2006, Ms Polume-Kiele wrote a letter to Mr Mario Cueva giving clearance 
and requesting setdement of the claim. The amount was paid in full - K2.5 million to 
Godwin Lawyers Trust Account. Ms Kiele in her letter stated (quote) :- 

. / refer to jour letter dated T d June 2006 on the above matter. A copy is enclosed for jour 
convenience. I note jour query on this claim and advise that, it is perfectly in order and thatjou should 
proceed to settle the judgment debt. It has taken you more than ajear to come back to me and query this 
judgment debt. In the meantime, the interest on the judgment sum is increasing. I therefore urgejou to 
proceed to settle the judgment sum including interests and costs immediately. " 

It appears the letter is a fabrication. Firstly, the Court Order and the Certificate of 
Judgment were purportedly obtained in 2002 and it took more than 4 years for the 
clearance letter to be issued by Ms Kiele, Acting Solicitor General. Likewise, it took 
Mr Kuvi more than 3 years to issue the clearance letter. 

This is a matter that warrants further investigation. Letters were written to Ms Hitelai 
Polume-Kiele, Mr Ian Augerea and Mr Godwin Haumu inviting them to address the 
Commission on issues raised above but no responses were received. 



Findings 

The letters by Mr Francis Kuvi and Ms Hitelai Polume-Kiele were a fabrication. 



373- 



2. The Claim appears to be a fraud and needs further investigation. 
Recommendations 

1 . The matter be further investigated by the Police. 

2. The following persons be referred to Police for further investigation:- 

i. Mr Ian Augerea, Registrar National Court be further investigated; 

ii. Ms Hitelai Polume-Kiele; 

iii. Mr Francis Kuvi; 

iv. Godwin Haumu; and 

v. Rex Leo 

3. The Attorney General and the Solicitor General conduct further 
investigation into this matter to ascertain amongst others if a proceedings 
were actually filed in Court. 



374- 



C. Civil Works 

The Commission examined some ten (10) matters and has reported on four (4) that 
concerned alleged breaches by the State of civil works contracts. The claims were pursued 
either in the National Court or through negotiated settlements with the Solicitor General. 

The Commission's Terms of Reference required inquiry into claims above K300,000. In all 
matters examined, the claims arose from 'Minor Works Contracts' which by statute are 
defined to be contracts valued up to K300,000. Despite that, the claims were settled by the 
Solicitor General for excessive sums - K4.1 million (Pioneer Construction) and K8.6 million 
(Manoburn Earthmoving). Both matters have been fully investigated, the reports for which 
are provided. 

The Commission notes the Department of Works is primarily responsible for the 
management of all civil works contracts. There is a three (3) stage process - feasibility, design 
and implementation. The Departments of National Planning, Finance, Treasury, Works and 
donor agencies are all involved in discussions as to funding. Once funds are secured, the 
implementation process follows. 

The implementation stage involves the engagement of the contractor following strict 
compliance with the tender procedures pursuant to the Public Finances (Management) Act 
(in particular the relevant Supply & Tenders Board requirements). 

When the contract is executed, implementation rests with the Department of Works for all 
projects funded by the National Government. That includes contract supervision and 
administration of the contract on behalf of the State (if delegated with the task). Payments are 
made consistent with the terms and conditions of the 



375- 



Works Contract. The certification and approval of any component of the contract must be 
certified by technical experts (engineer, architects, surveyors, builders etc, involved in the design, construction, 
supervision and certification) duly registered with their professional organizations. 

Despite the above comprehensive and widely recognized processes, the Solicitor General and 
Department of Finance failed to consult the Department of Works when considering the 
authenticity, price and payment of the claims. This was the trend in all matters investigated. 

Further, the Solicitor General failed to raise objection on the basis of the claimants' failure to 
include the Department of Works as a party to proceedings filed in the National Court. A 
further feature has been the Solicitor General's failure to insist on the referral of the claims to 
arbitration of disputes under the provisions of arbitration clauses which every Government 
department provide as a standard term. Arbitration provisions have the prime purpose of 
averting immediate resort to Court action. These are all in addition to the other defences 
identified in each report. 

The Commission finds that certain Solicitors General have been grossly negligent in 
protecting the State's interests. 



376- 



(a) Mountain Pearl Ltd 

A. DOES THE MATTER FALL WITHIN THE TERMS OF REFERENCE? 

1 . The matter falls within the Terms of Reference of the Inquiry. The contract 
was allegedly awarded on 11 March 2002. The Plaintiff filed the Court 
proceedings in 2004 and the matter was eventually settled out-of-court by a 
Deed of Release dated 28 February 2005, pursuant to which a part-payment 
was made in August 2005. 

2. This matter may be covered under the following Terms of Reference: 1, 5, 8, 
9, and 12. 

B. SOURCE OF INFORMATION AND DOCUMENTATION 



of: 



This brief comprises of facts and findings from the files and records 

• The Attorney-General's Office 

• The Solicitor- General's Office 

• The Department of National Planning & Rural Development - Office 
of Rural Development 

• The National Court Mount Hagen Registry 

• The Department of Finance 

• Central Supply & Tenders Board (CSTB) 

• Marley Nandi Lawyers 



377- 



BACKGROUND: RELEVANT FACTS 



THE MATTER 

r 



4. Mountain Pearl Limited (Plaintiff Company) filed a claim against the 

5. State [through the Department of Planning & Rural Development - 
Office of Rural Development (ORD) (Department)} in which it 
alleged that it was awarded a contract by the Central Supply & 
Tenders Board (CSTB) to construct some buildings at the Sialum 
Technical High School in the Tewae-Siassi area of Morobe Province. 
The alleged value of the Contract was IC1, 000,000.00. 

6. i The Plaintiff Company claimed that in preparing to start work on the 

7. building project, it expended money on mobilization costs, but the 

Department failed or refused to perform its obligations to provide 

funding for the construction works, thereby breaching the alleged 
contract. 

8. Based on the foregoing, the Plaintiff Company filed proceedings WS 

9. No. 969 of 2004 in the National Court at Waigani claiming damages 
in the sum equivalent to the value of the alleged contract being 
K1,000,000.00. The State responded by filing its Notice of Intention 
to Defend and Defence and the matter progressed until it was 
dismissed for want of s. 5 notice in 2006. 

10. However, the records of the Solicitor-General and the 

Department of Finance on the other hand, show that the 
Plaintiff Company's claim had been settled by the former 
Acting Solicitor-General; Francis Kuvi, by a Deed of Release 
dated 28 February 2005. 



378- 



1 1 . Based on the Deed of Release the Department of Finance has already paid out 
a total of K400,000.00 in two (2) separate payments of K300,000.00 and 
Kl 00,000.00 respectively. 

PAYMENTS BY THE DEPARTMENT OF FINANCE. 

12. According to the Department of Finance Cash Book, on 31 August 2005, the 
Plaintiff Company was paid K300,000.00 by cheque no. 818848 as part- 
payment on the Deed of Release - Payment vouchers ~ FF3 & FF4 on file as 
well as other documents from the Department of Finance confirming 
payment. 

13. Subsequendy, on 25 October 2005, the Plaintiff Company collected cheque 
no. 822372 for the sum of K100, 000.00, being a further part- payment on the 
settlement amount. 

14. Therefore, it appears that the Plaintiff has yet to collect K600, 000.00 from the 
Department of Finance to finally settle the entire amount in the Deed of 
Release. 

CHRONOLOGY 

15. The Plaintiff Company claims that by a Letter of Acceptance dated 11 March 
2002, the CSTB awarded it a contract for the construction of stage one of 
Sialum Technical High School. The alleged contract was in respect of Tender 
no. CSTB 01010, for Project no. 2.21 -El -02- 0395, and valued at 
Kl, 000,000.00. 

16. On 2 April 2002, the Plaintiff Company wrote to a Mathew Tepu, Director, 
Office of Rural Development (.Directoi) seeking his advice 



379- 



1 7. in respect of the availability of the Letter of Acceptance for its execution 
in acceptance of the alleged contract. The Director responded by letter 
dated 9 April 2002, confirming that the Plaintiff Company had been 
awarded three (3) contracts, including this one, and that as soon as the 
Letter of Acceptance was ready they would be contacted to sign the 
Acceptance. 

18. Eventually on 15 May 2002, the Plaintiff Company signed the Letter of 
Acceptance and thereafter, had allegedly expended a substantial amount of 
money to mobilize material, equipment and workmen to the project area. 
Further, the Plaintiff Company had requested the Department to make funds 
available for the commencement of the project, but the Director failed to 
respond. 

19. On 30 April 2004, the Plaintiff Company through its lawyers, Nandi & 
Company Lawyers, gave Notice of its intention to bring a claim against the 
State, as required under section 5 of the Claims By & Against the State Act 1996. 

20. However, by a letter dated 27 May 2004, the Acting Solicitor-General advised 
the Plaintiff Company that its purported section 5 Notice of 30 April was 
inadequate, as it did not include a copy of the alleged contract upon which the 
Plaintiff had intended to base its claim. 

21. On 28 June 2004, the Plaintiff Company's lawyers wrote a further letter to the 
Acting Solicitor-General in an attempt to improve its section 5 Notice, this 
time, enclosing a copy of the Letter of Acceptance and various 
correspondences exchanged between the Plaintiff Company and the Director. 



380- 



18. Thereafter, on 28 July 2004, the Plaintiff Company filed proceedings 

WS No. 969 of 2004. In its claim, the Plaintiff Company alleged fhat- 
(i) the State's failure to provide funding for the project, amounted 

to a breach of the alleged contract, 
(ii) as a result of the alleged breach, the Plaintiff Company was 

deprived of its revenue or benefits it would have enjoyed under 

the alleged contract and 
(iii) accordingly, the State was liable to the Plaintiff Company in 

damages equivalent to the value of the alleged contract. 

19. The Plaintiff Company served the Writ of Summons on the State on 4 August 

2004. The Writ of Summons had been issued out of the National Court 
Waigani Registry and nominated for trial (on the back of the Writ) in Mount 
Hagen. Based purely on this nomination by the Plaintiff Company, the court 
file was transferred to the National Court Mount Hagen Registry (without a 
court order granting such permission.) 



20. The State responded by filing a Notice of Intention to Defend and a Defence on 8 
September 2004. In essence, the State's defence stated that: 

(a) there was no contract as alleged by the Plaintiff Company and 

(b) even if there was a contract, neither the State nor the Department 
were privy to such contract and 

(c) in any event, the Plaintiff Company had itself failed to perform the 
prerequisite conditions of the contract whereby the Plaintiff Company 
was required to obtain and provide proof of insurance cover in respect 
of the project. 



381- 



21. As the file had been transferred to Mount Hagen, the Acting Solicitor-General 
forwarded sealed copies of the State's sealed Notice of Intention to Defend 
and Defence under the cover of a letter dated 13 September 2004, to be placed 
on the court file in the Mount Hagen Registry. 

22. By a letter dated 10 October 2004, Nandi & Company Lawyers acknowledged 
that the State had filed its Notice of Intention to Defend and Defence, and 
further, advised the Solicitor-General that the Plaintiff Company's intended 
application to strike out the State's Defence and enter judgment for the 
Plaintiff Company, for contravening Order 8 rule 28 of the National Court Rules 
by pleading the general issue. 

23. The Plaintiff Company filed a Notice of Motion on 20 October 2004 seeking 
an order that the State's Defence be struck out and judgment entered in favour 
of the Plaintiff Company. The application appears to have been supported by 
the Affidavit of Marley Nandi also sworn and filed 20 October 2004. The 
affidavit, however, does not sufficiently support such an application. 

24. By a letter dated 12 November 2004, Nandi & Company Lawyers advised the 
Solicitor-General that they had requested the Assistant Registrar to list the 
Plaintiff Company's application for hearing on the same day - 12 November 
2004. It appears from this letter, that the application by the Plaintiff Company 
had been returnable on 5 November 2004. Further, there were other 
applications returnable on the same date, arising from other proceedings 
against the State, which had also been filed by Nandi & Company Lawyers on 
behalf of KK Kuni Building & Constructions Limited - 



382- 



- WS 982 of 2004 - KK Kuni Building <<& Constructions limited -v- The State <<& 2 
Ors 

- WS 983 of 2004 - KK Kuni Building & Constructions Umited -v- The State <& 2 Ors 

- WS 984 of 2004 - KK Kuni Building Constructions Umited -v- The State <<& 2 Ors. 

AH of the above applications were seeking either summary judgment or 
default judgment - see (below) minute from David Lambu to Buri Ovia dated 
25 November 2004. 

25. On 25 November 2004, David Lambu from the Solicitor-General's office sent a 
facsimile to Buri Ovia, a lawyer from the Mount Hagen branch of the 
Solicitor-General's office, instructing him to attend the hearing of the Plaintiff 
Company's application and oppose same on the basis that the State's Defence 
did not offend Order 8 rules 21 and 28 of the National Court Rules. 



It cannot be ascertained from the files in our custody what became of the application 
for summary judgment by the Plaintiff Company, however, it is presumed from the 
succeeding events that the application may have not been heard or was heard and 
refused: the court file may assist once available. 

26. On 10 February 2005, Paul Paraka Lawyers took over the State's Defence with of 
this claim. Paraka Lawyers wrote a letter each to the Acting Solicitor-General, 
Francis Kuvi and a Tau Tau also from the Solicitor-General's office, seeking 
verification as to whether the Plaintiff Company had provided section 5 notice 
of its claim. From the documentation on the Solicitor-General's file, the 
Solicitor- General's office apparently did not respond to the query. 



383- 



This appears to have prompted a letter from Nandi & Company Lawyers to the 
Acting Solicitor-General dated 15 February 2005 and entided "Notice of 
Intention to sue the State by Mountain Pearl Limited & Jack Herebe." The 
letter advises that: 

"...The entire project was worth a sum ofK106, 000.00 and of these, a total of 
K7 6, 7 6 9. 50 was already paid to our client. Hence a sum of K29.230.50 remains due and 
pending payable to our client. We confirm his instructions that the assigned contracts were 
completed and certificates of completion were issued by the responsible people who oversaw the 
constructions of those projects. On numerous demands for payment of the contract value, the 
Office of Rural Development has failed and or neglected to release the funds earmarked for those 
projects. 

Now our client intends to sue the State to claim the remnant of the contractual sum. In that 
setting we say that this is our client's mandatory section jive (5) notice pursuant to the Claims By 
<<& Against the State A .ct 1996... " The letter requests the State to accept this letter as 
constituting s. 5 notice. 

Two (2) days later, on 17 February 2005, Francis Kuvi, as the Acting Solicitor- 
General prepared a letter of clearance to the Secretary for Finance authorizing 
payment of K1,000,000.00 to the Plaintiff Company. In support of his clearance 
letter the Acting Solicitor- General attached a copy of a Deed of Release dated 
28 February 2005. which he had counter-signed with the Plaintiff Company. 
No one at Finance seems to have picked up the anomaly in the dates, i.e., the 
DOR would seem to post date the Clearance letter of 17 February by 8 days. 
The clearance letter is stamped as received by the Office of the Secretary for 
Finance, on 12 April 2005. 



384- 



29. On 25 February 2005, Paul Paraka Lawyers forwarded a sealed copy 
of their Notice of Change of Lawyers to the Acting Solicitor-General 
for his records. Even then, there is nothing on file to show that the 
Acting Solicitor-General had advised the State's lawyers of his 
instructions to settle the claim by Deed of Release. 

30. By Deed of release dated 28 February 2005, the Acting Solicitor- 
General settled the claim by the Plaintiff Company for 

Kl, 000,000. 00, being the entire amount claimed in the Statement of 
Claim. Francis Kuvi signed the Deed of Release on behalf of the 
State, and a representative of the Plaintiff Company signed on its 
behalf, albeit not under seal. 

31. Thereafter the following events transpired: 

• on or about 12 April 2005, the Secretary for Finance received 
Francis Kuvi's letter 

• by a letter dated 24 May 2005, Nandi & Company Lawyers wrote 
to a Boas Hembehi of the Office of the Secretary for Finance, 
advising of the settlement and authorizing Jack Herebe, the 
Managing Director of the Plaintiff Company, to pick up the 
cheque from the Department of Finance. 

• also on 24 May 2005, Nandi & Company Lawyers wrote to Boas 
Hembehi advising that payment was in order and will not entail 
any legal consequences. 

• Hembehi may have raised concern with propriety of such 
payment. 

32. Then on 31 August 2005, the Department of Finance released a 
cheque for K300,000.00 to the Plaintiff Company in part-payment of 



385- 



its claim, and thereafter on 25 October 2005, the Department of Finance paid a 

further Kl 00,000.00. 

It appears that K600, 000.00 remains to be paid under the Deed of Release. 



LIST OF DOCUMENTS TO BE TENDERED 



EXHIBIT NUMBER 



DATE 



DOCUMENT 



COMMENTS 



OD1 



11 March 2002 



Letter of Acceptance from|Letter 

the Central Supply 

Tenders Board to theManag 

Plaintiff. 



allegedly awarding the contract Plaintiffs claim based on. 

& Attached to the letter is a Receipt signed under seal by a Jack Herebe as 

ing Director of Mountain Pearl. 



OD2 



Undated 



Tender document 



Showing recommendation of Plaintiff Company's bid. 



OD3 



2 April 2002 



Letter from "Mountain 
Limited" Sawmilli: 

Construction and 

Maintenance Contractors to 
the Director, ORD 



PearlSeeking the Director's advice as regards certain contracts that the 
ng Plaintiff Company claims were awarded in its favour. 



OD4 



9 April 2002 



Letter from Mathew Tepu 

the Director, ORD to the awarded 

Plaintiff Company. 



Advising the Plaintiff Company of the contracts that it had been 



OD5 



30 April 2004 



Letter from Nandi 
Company Lawyers to 
Solicitor-General 



&The letter purports to comply with section 5 of the Claims Bj <& A.gainsi 
fat the State Act 1996. 



OD6 



14 May 2004 



Marley Nandi & CompanySho- 
Lawyers '■•Notice Service named 
Form" 



ws proof of service of purported section 5 notice. The Process Servet 
on the form is John Kekeno. 



SG7 



27 May 2004 



Letter from the Acting Ad- 
Solicitor-General to Nandi 
Company Lawyers 



vising that the Plaintiff Company's purported section 5 notice is 
& inadequate /insufficient. 



OD8 



28 June 2004 



Letter from Nandi & 



The letter responds to the Acting Solicitor- General's letter 



386- 



Company Lawyers to theof 
Acting Solicitor- General 



27 May and attempts to correct and improve the purported section 5 
notice provided earlier by attaching a copy of the CSTB Letter oi 
Acceptance. 



0D9 



28 July 2004 



Writ of Summons filed by The 
Nandi & Company Lawyers seeks 
on behalf of the Plaintiff 
Company 



Statement of Claim essentially alleges breach of contract and 
damages to the total value of the alleged contract - K1,000,000.00 
for alleged loss of benefit of the contract. 
The Statement of Claim alleges that the Plaintiff Company had 
expended a substantial amount of money in preparation and 
mobilization, but the Statement of Claim fails to specifically plead the 
particulars of such claim — only makes a note that Full particulars Oj 
money expended will be suppliedprior to the date of the trial. " 



OD10 



30 July 2004 



Letter from Nandi & Co. 
Lawyers to the Acting SG 
enclosing Writ of Summons 

by way of Service. 



OD11 



Undated 



Company Profile of theSets 
Plaintiff Company 



out particulars of the Plaintiff Company and the services it 
provides. The Profile states that the Plaintiff Company was formerly 
known as Kuni Business Group Incorporated, registered with the IPA. 



SG12 



} September 2004 Defence filed by Francis|The 
Kuvi, the Acting Solicitor- 
General on behalf of the 
State. 



Defence essentially- 
denied the allegations in the Statement of Claim 
saying there was no contract. 

the Plaintiff had failed to give s. 5 notice of the 
claim, and that the Plaintiff had failed to name the proper party from 
the department concerned; 

Plaintiff had caused the non-performance of 
Contract by failing to comply with a prerequisite condition requiring 
Plaintiff to obtain all insurance policies and to show receipt of 
payment of premiums as proof of payment. 



SG13 



J September 2004 Notice of Intention to 
Defend filed by the 



387- 



Acting Solicitor- General 



SG14 



13 September 2004 



Letter from the Acting Enclosing 
Solicitor-General to the and 
Assistant Registrar, National|had 
Court Mount Hagen 



sealed copies of the State's Notice of Intention to Defend 

Defence filed at the National Court Waigani Registry as the file 

somehow been transferred to the Mount Hagen Registry (without 

a court order.) 



OD15 



10 October 

2004 



Letter from Nandi 
Company Lawyers to 
Solicitor-General 



& Notifying the State of the Plaintiff Company's intention to apply foi 

the judgment on the ground that the State had pleaded the general issue in 

contravention of Order 8 rule 28 of the National Court 'Rules. 



SG16 



20 October 

2004 



Notice of Motion filed 
Nandi & Company Lawyers 



by The 



motion comprises an application by the Plaintiff to strike out the 
State's Defence and enter judgment in favour of the Plaintiff. 



OD17 



20 October 

2004 



Affidavit of Marley Nandi|The 
sworn 20 October 2004. 



affidavit bears the file reference WS 969 of 2004, but the Plaintiff is 
named as "KK Kant building & Constructions Ud. " It annexes a copy of 
the Plaintiffs letter of 10 October 2004, and appears to support an 
application to strike out the State's Defence. 



OD18 



12 November 2004 



Letter from Nandi 

Company Lawyers to the|Plaintiff 

Solicitor-General 



& Advising the Solicitor-General of various motions filed on behalf of the 
Company and KK Kuni Building & Constructions Limited in 
respect of claims filed against the State. 



SG19 



25 November 2004 



Facsimile 

Transmission from Solicitor- 
General's Office enclosing B 
Minute dated 19/11/04 to 
Buri Ovia, SLO Mt Hage: 
Office. 



Instructing Ovia to attend at the National in Court Mount Hagen to 

oppose various applications by the Plaintiff Company and KK Kuni 

uilding & Constructions Limited for Default Judgment and Summary 

Judgment, all against the State (all filed by Nandi & Company Lawyers 

behalf of the Plaintiffs.) 



The Minute attaches copy of 
a judgment in the case of 

Akipa <& Ors v Lowa & 
Ors | [1990] PNGLR 502. 



388- 



OD20 



10 February 2005 Letter from Paul 

Lawyers to the Acting; 
Solicitor- General, Francis 
Kuvi 



ParakaSeeking instructions /verification as to whether the Plaintiff had given 
section 5 notice, and general instructions to prepare for trial. 



OD21 



10 February 2005 Letter from Paul 

Lawyers to the Acting; 
Solicitor- General Office, 
attention: Tau Tau 



ParakaSeeking 



instructions /verification as to whether the Plaintiff had given 
section 5 notice, and general instructions to prepare for trial. 



OD22 



15 February 2005 Letter from Nandi &fThe 
Company Lawyers to the 
Acting Solicitor- General, 
Francis Kuvi 



letter purports to comply with the requirements of section 5 of the 
Claims Bj & Against the State Act 1996, and states that the Plaintiff had 
been awarded a contract for K106,000.00 of which K76,769.50 had been 
paid and K29.230.50 remained to be paid. 



SG23 



17 February 2005 Letter of Clearance 
Francis G. Kuvi, the 
Solicitor- General tc 

Thaddeus Kambanei, 

Secretary for Finance 



from Advising of the Plaintiff Company's claim and subsequendy, 
Acting settlement of same by Deed of Release, and requesting payment of the 
settlement amount by the Department of Finance. The Clearance 
letter attaches (the) Deed of Release which post-dates it. 



OD24 



25 February 2005 Letter from Paul Paraka Enclosing sealed copy of Paul Paraka Lawyers' Notice of Change of 
Lawyers to the Acting Lawyers. 
Solicitor- General 



SG25 



28 February 2005 Deed of Release signed by 
Francis Kuvi and the 
Plaintiff Company 



Settling the claim for K1,000,000.00. 



OD26 



24 May 2005 



Letter from Nandi & 
Company Lawyers to the 

Secretary for Finance 



Pursuing payment of the setdement amount. 



OD27 



24 May 2005 



Letter from Nandi 
Company Lawyers to 
Secretary for Finance 



&Pursuing payment of the setdement amount and advising that 
thepayment is in order and will not entail any legal consequences. 



FD28 



26 August 



Department of 



The report indicates that the claim of K1,000,000.00 had 



389- 



2005 



Finance Public 
Division - Internal Pre 
Verification Report 



Accountsbeen certified by a Nelson H, and entered in the Register* for payment 

■Auditand that only K300,000.00 of the full amount had been paid as at August 

2005. 



FD29 



31 August 2005 



Department of Finance Reqi 
Requisition for Expenditure 
form -FF3 



uesting payment of K300,000.00 to the Plaintiff Company, 
beingpaymeni ofO/S Deed of Settlement Claim. " The Form .was signed as 
authorized by the same person whose signature appears on the Pre- 
Audit Verification form, and approved by the Acting Deputy Secretary 
(Operations.) 



FD30 



31 August 2005 



Department of Finance In 
General Expenses Form 
FF4 GE: 1046817 



respect of payment of K300,000.00 to the Plaintiff 
Company "beingpaymentofojsDOR. claim" 
The FF4 -was certified by the Acting Deputy Secretary 
(Operations) 



FD31 



31 August 2005 



Department of Finance 
Treasury Remittance Advice 



& Confirming payment of K300,000.00 by cheque no. 818848 to the 
Plaintiff Company on 31 August 2005. 



NC32 



7 April 2006 



Court Order filed by Paul 
Paraka Lawyers 



SG33 



12 April 2006 



Letter from the Acting FirstlAdvising 
Assistant Secretary 
Management & Expenditure!}' 
Control, Department of]K100. 
Finance to the Acting approval 
Solicitor-General 



of part-payment collected by the Plaintiff Company and 

Cash seeking verification as regards further payment in light of NEC 

ecision halting all payments under Deed for amounts exceeding 

i,000.00. It is also stated in this letter that the claim is pending prioi 

of the Minister for Finance under s. 61 of the Public Finances 

(Management) Act. 



OD34 



26 April 2006 



Letter from Paul Paraka Rept 
Lawyers to the Acting pi 
Attorney- General 



orting on the status of the claim, in particular, advising that the 
roceedings had been dismissed for want of section 5 notice. 



SG35 



26 June 2006 



Letter from Hitelai Polume- 
Kiele to the Secretary for|had 
Finance (Department of 
Finance — Cash 



Instructing the Secretary not to pay the Plaintiff Company's claim that 
allegedly been setded by Deed of Release for the following reasons: 
• The Solicitor-General's file did not contain die Deed of Release 

relied on by the Plaintiff 



390- 







Management & Expenditure 


Company in requesting payment, and • Pursuant to the 






Control) responding to the 


Court's decision in the Yama case, all Deeds settling claims 






latter A letter of 12 April 2006 


exceeding K100,000.00 are deemed null and void. The Acting 
Solicitor-General also requested copies of the supporting 
documentation relied on by the Plaintiff Company for verification, 
and confirmation that payment ■will not be made. 


OD36 


7 August 2006 


Letter from the 


Acknowledging receipt of cautionary note regarding the authenticity 






Ombudsman Commission 


of such claims. 






to Hitelai Polume-Kiele 




OD37 


3 September 2008 


Historical Company Extract 


The extract shows as follows — 






of Mountain Pearl Limited. 


the Plaintiff Company was registered in 2001; ceased 
operations on 20 June 2005; and the Plaintiff Company is 
presendy deregistered and 
the Plaintiff Company has always had only one (1) director and 
shareholder — Jack Manda Herepe of Tanggi Village, Koroba Tari, 
Western Highlands Province. 


OD38 


3 September 2008 


Current Company Extract of 


The extract shows that the Plaintiff Company has been deregistered 






Mountain Pearl Limited as at 


since 30 June 2005. 






3 September 2008. 





D. FINDINGS 



(a) Claim - Liability and Quantum 



Cause of Action in Law 



33. The factual background giving rise to the claim and the Statement of 
Claim pleaded, do not disclose a reasonable cause of action: 



391- 



(a) I' Hie Plaintiff Company alleged that it had been awarded a 

building contract for the construction of stage one of Sialum 
Technical High School in Morobe Province. However, apart 
from the Letter of Acceptance which was dated 1 1 March 2002, 
apparently only delivered and signed by the Managing Director 
of the Plaintiff Company, there is no written agreement. 

(b) The Letter of Acceptance advised that a formal contract would 

ensue to formalize the relationship between the parties. Further 
and more importandy, as a prerequisite of the Plaintiff 
Company's performance under the purported contract, it was 
required to first obtain and produce proof of payment of 
insurance premiums. From the records, there is no 
evidence of- 

(i) the formal contract or 

(ii) the Plaintiff Company's compliance with the said 
prerequisite. 

(c) In spite of its failure to obtain insurance premiums, the 

Plaintiff Company claims to have — 

a. proceeded with mobilization of equipment and labour at 

the project site, and 

b. pursued the Office of Rural Development for funding for 

c. the project, 
however, the Office of Rural Development did not 
respond favourably to the Plaintiff Company's request for 
funding, hence the Plaintiff Company filed the claim 
alleging breach of the purported contract. 



392- 



33. The claim by the Plaintiff Company for damages in the full amount of 
the purported contract is based on a misconception. Even if the court 
had decided that there was a contract and that it had been breached, 
the appropriate measure of damages would have been based on the 
actual loss suffered as a result of the expectation. 

34. Secondly, it appears quite odd that the Plaintiff Company filed 
proceedings for damages at the first instance rather than a claim 
seeking an order for specific performance, which in the circumstances 
would be reasonable. If the Plaintiff Company had indeed incurred 
mobilization costs, there is no evidence of such expenses either on the 
Solicitor-General's file or forming part of the Plaintiff Company's 
pleadings. Paragraph 8 of the Statement of Claim endorsed on the 
Writ of Summons filed 28 July 2004 pleads that the Plaintiff Company 
had expended a substantial amount of money to prepare and mobilize 
equipment and labour, but where it states that particulars of such costs 
would be provided, the claim states that "Full particulars of the money 
expended mil be supplied prior to the date of the trial? This offends the law in 
relation to pleading of special damages, as set down in cases such as 
the Ban^ Kopi Fektori Case (a decision by Justice Gavara-Nanu.) This 
implies only one conclusion: that the Plaintiff Company did not in fact 
incur any mobilization costs. 

The Deed of Release was not signed by Francis Kuvi and was fraudulently 
manufactured by Daniel Kop, Jack Herepe and other unknown persons. 



393- 



(b) Attorney-General & Solicitor-General 

(c) Compliance Issues 

Public Finance (Management) Act 1995 

• Ministerial Approval was not obtained prior to Mr. Kuvi signing the DOR 

Claims By <& Against the State Act 1996 

• No proper section 5 notice was given to the Solicitor General or the 
Attorney General, the only two State officials upon whom such notice is to 
be served. 

NEC Decisions 

• Directive 10 of NEC Decision NG 07/2002 which specifically prohibited 
any further out of court setdements was ignored by Mr. Kuvi when he 
signed the DOR on 28 th February 2005. 

• Mr. Kuvi also breached Directives 5, 6 & 7 of NEC decision 150/2003 

Recommendations 

1 . Mr. Francis Kuvi be referred to the fraud squad for further 
investigations. 

2. Mr. Daniel Kop is referred to Fraud Squad as lawyer acting for 
Mountain Pearl at the time the Deed of Release was entered into. 



394- 



Mr. Jack Herepe also be referred to the fraud squad for further investigations. 
Pending outcome of case, his assets be seized under the Proceeds of Crimes Act 
2005. 



395- 



Payment Schedule ~ Mountain Pearl Limited - DEPARTMENT OF FINANCE 

Cash Book. 



Date 


















31/08/05 


1046817 


207 


420 
1 


2107 


135 


Mountain 
Ltd 


Pearl 


O/S Deed of 
Setdement 


C 

Q 

c 

Q 


25/10/05 


1053372 


207 


420 
1 


2107 


135 


Mountain 
Ltd 


Pearl 


Pmt for o/s DOR 

claim 



396- 



(b) Manoburn Earthmoving Ltd 
PARTIES 

t For the State 

(a) Solicitor General ("SG") & Attorney General ("AG") 

(b) Posman Kua Aisi Lawyers (instructed to act on behalf of the State) ("PKA") 

2. For the Plaintiff 

(a) Manobum Earthmoving Limited ("Manoburn") 

3. Others (if any) 

(a) Department of Works ("DoW") 

(b) Department of Finance ("DoF") 

(c) Oil Palm Industry Corporation ("OPIC") 

(d) Oro Province Supply and Tenders Board ("OPS&TB") 

DOES THE MATTER FALL WITHIN THE TERMS OF REFEENCE 

4. A claim for K13m/llion for breach of civil works contract to upgrade 12 harvest 
roads at Oro Province. Almost K5million has been paid by the State with the 
balance of K3million the subject of an appeal to the Supreme Court. 

5. The claim falls within the TOR (a)(1) (i) to (xii),(2),(3),(4),(5),(8),(10) and 
(12) 

DOCUMENTS AND INVESTIGATIONS CONDUCTED AT 

6. The documents the subject of review and examination are 



397- 



a. Posman Kua Aisi Lawyers-(For the Office of the Solicitor General/ Attorney General) 

b. Vincent Mirupasi Lawyers 

c. Department of Finance 

d. Department of Works 

THE BASIC FACTS THAT ARE ALLEGED TO GIVE RISE TO THE CLAIM 

7. Manorbum Earthmoving Limited ("MANORBURN") is currendy registered with Investment 
Promotion Authority. It was incorporated as a company on 12th November 1991 and de- 
registered on 2nd January 1997 for non compliance of statutory obligation. In October 1997, 
necessary application for reinstatement was made before the National Court and the Court 
ordered IPA to reinstate the company. The Company provided its updated Annual Returns as 
required by statute together with relevant documents and payment and the company was 
restored to the Companies Register on 10th October 1997. (Refer to Folder "10" &"U" of 
"13B") 



The Directors and Shareholders of the Company are Mrs. Rose Titipu (234,000 
ordinary issued shares as at 31 December 1999) and Mr. Timothy Titipu (Secretary 
of the Co.) (500,000 ordinary shares as at 12 November 1999) 
The records produced by IPA to the Commission indicate that the following 
equipment and asset were registered as at 17 th February 2008. They include:- 

Q. IPA Reg. No. 1 3683-Toyota Land Cruiser (Fixed Charge and 

Unsatisfied) 
D. IPA Reg. No. 1 3684-Hjundai Hydraulic Excavator(Fixed Charge and 

Unsatisfied) 
C. IPA Reg. No. 1 3 68 5 -Hyundai Hydraulic Excavator Eng. (Fixed Charge 

and Unsatisfied) 



398- 



u. IPA Reg. No. 1 3 686 -Caterpillar D6 Bulldozer Eng. (Fixed Charge and 

Unsatisfied) 

e. IPA Reg. No. 1 3687-Loader(Fixed Charge and Unsatisfied) 

f. IPA Reg. No. 13688-Nissan Dump Truck Registration No. EAH-576 (Fixed 
Charge and Unsatisfied) 

g. IPA Reg. No. 1 3689-Nissan Dump Truck(Fixed Charge and UnsatisEedf 

- The Oro Oil Palm Industry Corporation (OPIC) Program Contractual Claim by 
Contractor Manoburn Earthmoving Ltd 

9. The Oil Palm Industry Corporation ("OPIC") program commenced in 1994 to further 
develop the Oil Palm Industry in PNG-and the funds were secured by way of a loan from 
the World Bank. 



10. 



The Department of Works ('DoW) was tasked to carry out the implementation of the 
Infrastructure Portion of the Program which consisted of 

a. Upgrading of existing harvest roads for all weather access; 

b. Construction of new harvest roads into areas as per OIC plans for new plantations, and 

c. Improve existing Infrastructure facilities (institutional roads, housing, aid post, schools, 
etc,) for the communities in those areas 

The Minor Works Contract 



11. Manorburn was engaged by the State/OPIC to upgrade 12 agricultural feeder roads in the 
Oro Province. The Oro Provincial Government Supply and Tenders Hoard 

"(I) Refer to relevant documentation which includes Current and Historical Extracts and (2) Note that the equipment were on hire purchase and that the 
principal of the company had written to the then AG Mr. Sao Gabi to speed up payments for the daim as a result of the DOR/Default Judgment Order 



399- 



("OPGSTB") headed by Mr. M. Derati fas Chairman in 1997-1998) and Col. Ken Noga (as 
Chairman in 1999) approved and awarded the Contract to Manobum in respect of the 12 
roads indicated below: - 

► ContractMWC 36-JA-60A1 / 'DR1 '7 -Construction ofAgenahambo Road 

► Contract MWC 36-YS- 1A-60A 1 /DR 27 -Construction oJTombata Road 

► Contract MWC 36-YS- 1A-60A 1jDR 3 1 -Construction ofSiaiRaad (Section 1), 

► Contract MWC 36-YS- 1A-60A 7/DR 32- Construction ojSiai Road (section 2). 

► Contract MWC 36-YS-01/DR 81 A-Construction of Serembi/Diko Road-Section 1 (Tenderpapers 
indicate closing of bids as at 22 October 1997) 

► ContractMWC 36-YS-02/DR37- Construction of Kakandetta/Jonita Road. (M. Derari as 
Chairman approved Iff July 1998) 

► Contract MWC 36-YS-0 1 /DR 5 1 -Construction ofFomta Road. 

► ContractMWC 36-YS-02 1 DR52-Construction of OrekitaRoad. (M. Derari as Chairman 
approved Iff 1 July 1998) 

► ContractMWC 36-YS-03/DR 1 21 A-Construction ofllimo Road-Section 1. (Ken Noga as 
Chairman approvedl 5.03.99) 

,)► ContractMWC 36 YS-03/DR 1 21 ^-Construction ofllimo Road-Section 2. (Ken Noga as 
Chairman approved 1 5.03.09) 

► ContractMWC 36 YS-03/DR 129 <& 1 30-Construction of Danny and TerterRoad 
(SakitaFeederRoad). (KenNoga as Chairman approved 1 5.03.99) 

► ContractMWC 36-YS-03/DR 87 <& DR 8 8 -Construction ofShirma Bika Road. (Ken Noga 
as Chairman approvedl 5 .03.99) 

(Refer to FOLDER "7" & "8" of "13B"- Contracts for Minor Works and Costing's 
and the approval for the award of the Minor Road Works Contracts ("MRW" 
Contracts.) 

The only documents sighted by the Commission reflect that the Provincial CSTB 
office had not gone for a public tender thus providing an opportunity for other 
contractors to bid for the contract for road works. 



400- 



13. During the work progress of the construction phase, Manoburn submitted its progress claim 
to the OPIC Project Office and the Department of Works for payment. The Company had 
in fact processed a number of invoices which was subject to clearance by the Works 
Department. 

14. The assessment was normally conducted by the appointed superintendent of the project to 
ensure that the works was done in accordance with the specification provided under the 
contract. All progress claims would require certification and approval from the Engineer 
(who is a registered Engineer with the relevant body as required by statute). That certification 
is then processed through the Department of Works for payment out of funds approved for 
the project. 

15. The Department of Finance has no responsibility to facilitate the payment. In the 
normal course of business, the claims were rejected due to flaws in the work and the 
need to rectify such problems was common amongst contractors lacking the 
capacity to properly carry out the work before a certificate is issued. 

16. The evidence and perusal of documents indicate that Manoburn took the Department of 
Works and the State to Court over claims representing various heads of damages such as 
non-payment of agreed amounts and claims for loss of business. Manoburn also claimed that 
because of non — payment, its business would have prospered and it lost the opportunity to 
make additional profits. In addition, it has incurred unnecessary expenses because it was not 
paid on time. 

17. Mr. Brian Kimmins, Chairman of the CSTB gave evidence to the Inquiry on 23 rd September 
2008 (COIFINANCE 25 dated 23 rd September 2008 at pages 675 to ) and made a specific 
reference to instances where Contractors were not performing their contracts and the need 
for CSTB to monitor the performance of Contractors particularly with the issue of 'stand 
down'; 



401- 



"A. .. .From my contractual knowledge, there is allowance for interest to be added to a claim that is put in by a 
contractor or a service provider or supplier when payment is made or in such situations. A stand down 
one would think should only be applied to instances whl m there is a land disputes and that sort of thing, 
but I really think for the sake of not being paid, but that is a really poor reason to have to pay a 
contractor for stand down time. 

A very poor reason, and that is — we hear those complaints are becoming very common by contractors as 
to whether they have got to stop work because they have not been paid. I don't know if it is the system 
that is slow or what is actually the cause of the nonpayment as per the terms of the contract. Every 
contract states that you put a claim in. and most of them are 30 days. Within 30 days we know 
instances where contractors are waiting three to four months to get payments. Contractors through sheer 
frustration do stand down until they get paid. So I do not think the stand down clause in the contract is 
therefor the slackness of the agency that is not paying the bills on time, it for other reasons (weather). 

Q. In the course of pour investigation, we have come across matters where despite the contracts, stating specific 
amounts, penalties et cetera, when contractors have gone to court, either by a settlement or by ajudgment of 
the court have secured massive amounts in terms of interest on work performance, et cetera, nonpayment. 
You aware of that, what is your comment on that? 

A. It is just poor performance on the part of the agency involved. If a contractor has to go to that extent - if the 
contractor has carried out what it is expected to do as per the requirements of the contractu there is no 
reason why they should not be paid on time. So that really should not be the current system; it should not 
happen at all . 



The Company engaged the services of Kinhill Kramer to assess the engineering aspects of 
the construction work on the road and RAM Consultants for accounting matters. It did not 
resort to the dispute/arbitration clause in the 



402- 



Standard Minor Works contract for the 12 feeder roads which was the most suitable process 
to deal with the issues over payment 

19. The Commission notes that the engagement of the professional firm formed part of 
the heads of claim for damages which is totally a matter for Manoburn to incur 
rather than passing it onto the State. That was also another flaw in Mr. Gelu's 
acceptance of Manoburn claim for the State to pay for professional services rendered 
to the Company. This was a private business arrangement. 

-The Claim 
Letter of Demand dated 6 th October 1999 from Shepherds Lawyers Demanding 
Payment of K804, 053.94 before 15 th October, 1999. 

20. On 8 th November 1999 Mrs. Cathy Davani (now Justice Cathy Davani) of Shepherds 
Lawyers wrote to the Secretary for Works and Implementation (Mr. Alphonse Nigints/Mr. 
N. Gopave) as a follow up to a series of telephone conversation with the two officers 
primarily over the demand for setdement of payments due to Manoburn. The deadline for 
any responses to the letter was 12 th November, 1999. 

21. On 15 th November, 1999 Shepherds Lawyers gave 'formal notice of a claim to be made 
against the State 'in accordance with Section 5 of the "Claims By and Against the State Act, 1996 
("CBAS Act"). 

- Chronology based on National Court documents Sled in respect of the WS 
285 1 2000proceedings 

22. Our review of the large volume of documents provided to the Commission by Posman Kua 
Aisi Lawyers provide a chronology on the proceedings in court which also included 
extensive research on the law, submissions on law, court 



403- 



23. appearances both in the National Court and the Supreme Court, various exchanges 
of correspondence between the parties, Department of Works documents, 
uncontested hearings on the Default Judgment, setting aside of the default judgment 
and eventually the Deed of Release. 

24. Writ of Summons No. 285 of 2000. dated 16 th March 2000 was filed in the National Court, 
Waigani on 1 7 th March 2000. The claim was for breach of contract (Minor Works Contract) 
over delays in payment for completed work consistent with the terms of the contract, loss of 
business, accrued interest on monthly repayments to Nambawan Finance (Lease of heavy 
machinery), Kinhill Kramer expenses for technical and contract assistance particulars prior to 
trial, RAM Consultants-consultancy expenses, accounting, legal, accommodation, travelling 
and hire car expenses incurred by plaintiffs representatives in their attempts to resolve the 
breaches and secure payments. 

25. 22 nd June 2000, Blake Dawson Waldron Lawyers ("BDW") informs the Acting Solicitor 
General that the Notice of Intention to Defend filed on 29 th March 2000. Our inquiries 
reveal that the "Defence" was to have been filed on 1 7 June 2000. BDW gave notice of their 
intention to apply for default judgment. 

26. On 14 July 2000, BDW served application for default judgment on the State which included 
(1) Affidavit of Catherine Anne Davani in support of default judgment filed 14.07.00; (2) 
Affidavit of Search; and (3) Notice of Motion to move for orders for entry of default 
judgment and for damages to be assessed. 

27. On 2 nd August, 2000, Notice of Motion dated 29 th March 2000 was filed by the then 
acting Solicitor General Ms. Kiele in the National Court seeking orders for the proceedings 
to be struck out. The Application was supported by the Affidavit of Mr. David Lambu 
dated 30 th March 2000, Mr. Lambu deposes to the fact that; 



404- 



/. No section 5 notice as required by CBAS Act was served on the Office of the Solicitor General, 



2. Cause of action was for alleged breach of a number of contracts the first of which is alleged to have occurred on 
24 April 1997 and this proceedings has been filed on 16 March 2000 which is almost three years later. 
(Statute time barred) 

28. Application for Default Judgment was ordered by the National Court on 11 August 2000 

and entered by the Registrar on 21 st August 2000 in the following terms; (1) default judgment 
be entered against the defendant and for damages to be assessed; and (2) the defendant 
(State) pay the costs of this application. 

29. On 25 August 2000, BDW informed the then acting Solicitor General, Mr. Lambu of the 
'need to settle the matter of damages.' 

30. On 2 nd November 2000, Mr. Titipu wrote to Mr. Sao Gabi, then Attorney General on the 
need to settle the claim. 

31. On 10 th November 2000, Mr. Sao Gabi (then AG) responds to the letter and advises Mr. 
Titipu to file a Notice of Change of Lawyers and to pursue the claim through his lawyers. 

32. On 3 rd November 2000, Mr. Titipu under letterhead of Manoburn writes to Mr. Damem as 
the new AG/Secretary to Department on the settlement of the claim. Between November 
2000 and February 2001, the records indicate that Mr. Titipu wrote direct to the 
Department of Attorney General (S. Gabi/F. Damem/Gelu) Department of Finance (John 
Edeleni-AS /Administration Services; late Mr. Tarata (then Secretary-DoF) 

33. 30 th January 2001-Mr. Edeleni wrote to the Secretary and AG requesting clearance on 
matters raised by Mr. Titipu. (It is noted that an handwritten minute on the letter by Fred 
Tomo as follows; 



405- 



"Mr. Dam em, 

If the claims of this magnitude is to be settled by one person, the claim must be thoroughly assessed 
by several buyers. Each must provide their opinion independently. Here is a risk that the 
Department might be accused of not checking claims well. Pis let us discuss this and put 
mechanism in place. Fred Tomo 27102/01. 

- The Conduct of the then Minister forjustice, Hon. Puri Riung 

33. The Commission notes from the records obtained from the Office of the Solicitor 

General, that on 13 th February 2001 -Hon. Puri Riung, MP Minister for Justice by 
issued a Ministerial Directive to Mr. Damem, that he "mmm(2) Issue a new Legal 
Clearance to the Treasury <<& Finance Department to pay out this claim without further delay; 
(3) Do whatever is possible within law to expedite the payment as the Company is desperately in 
need of Funds to bail out equipment from Nambawan Finance Ltd; and (4) Inform 
MANOBURN Umited of the actions your Office is taking." (Refer to Folder "2" of 
"13B" and Attachment "B") 



34. The Commission notes with concern that the directive issued by the 

Minister relates to an abuse of power, especially matters that concerns a 
claim against the State and not only that but an issue that is currently active 
in the National and Supreme Court. The directive is our view an attempt to 
exert influence over Deed that has been challenged in the National Court by 
the State. Mr. Damem has in fact instructed PKA Lawyers to deal with the 
default judgment and the Deed of Release. 

(It is to be noted that Hon. Puri Ruing was not called to assist the COI with this 
aspect of the inquiry due to the completion of the tenure of the Commission) 
- Opinion by John PALEK, Legal Officer dated February 2001 to Mr. 
Zacchary Gelu on the Manorburn Earthmoving v The State-WS No. 285 of 
2000. 



406- 



35. On 18 February 2001, Mr Palek rendered a legal opinion to Mr. Gelu and recommended 
setdement of the claim at K8.2million. He relied on documents submitted to SG by 
Manoburn and based on the actual business loss of the company for a period of three (3) 
years as a result of the dispute of delay in the payment of progress claim. It is evident that 
Mr. Palek a recently admitted lawyer was assigned by Mr. Gelu to undertake the assignment 
and advise on quantum and liability of the State. (See the evidence of Mr. Kawi at page _ of 
this submission. (Refer to Folder "2" of "13B" and Attachment "D") 

36- Our observation of the Opinion rendered by Mr. Palek to Mr. Gelu with respect, disregarded 
the lack of research into the relevant legislations namely Attorney General Act, Claims by and 
Against the State Act, Public Finances (Management) Act and the Statute of Frauds and limitations Act, 
assessment of the technical reports prepared by the Department of Works which was the 
most important document. The officer concerned also failed to liaise and consult with 
officers at the DoW in order for the State to defend the proceedings. 

37. It is with those concerns that Mr. Palek's involvement and role he played however minor has 
caused the State Eight million Kina of which Five million was paid in a scheme that was 
orchestrated by Mr. Gelu to enrich Manoburn. (Mr. Palek was invited to assist the 
Commission with the matter and he advised of his availability to assist the Commission on 
or about October 2009) 

- Mr. Zacchary Gelu's recommendation for settlement 

38. On 21 February 2001, Mr. Gelu recommended to the Attorney General that the claim 
should be settled at K8.6 million. He also referred to the legal opinion rendered by Mr. John 
Palek in support of his recommendation. 



(Refer to Folder "2" of "13B" and Attachment "D") 



407- 



- Proceedings for Assessment of damages 

39. 27 April 2001: Mr. Moses Murray of Murray and Associates filed in the National Court, the 
Change of Lawyers document on behalf of Manoburn (WS 285 of 2000). 

40. 30 May 2001: Mr. Murray filed a Notice to set down for trial on assessment 

47, of damages. Mr. John Kawi the then Solicitor General endorsed the Notice as Solicitor General (WS 

285 of 2000). The endorsement was separately confirmed by 
Messrs Kawi and Murray on evidence before the Commission. 

41. On 29 th June 2001, Mr. Francis Damem the then Attorney General engaged Vosman KuaAisi 
Lauyers to institute proceedings to set aside the Deed of Release. The proceedings dealt with 
the authority of the Attorney General under the CBASA to settie matters. Mr. Gelu had 

always contented that being the Solicitor 4 

against the State without consulting the Attorney General. 

42. He also advised Mr. Gelu that the matter was briefed out to PKA and that he was no longer 
responsible for the file. On 5 July 2001, PKA advised Murray and Associates that the firm has been 
instructed by the AG to defend the proceedings with the "possibility oj re-opening the case on thejudgment on 
liability and as well 

4 
9. defend allproceedings in respect of quantum. ' 

43. Whilst ongoing discussions between PKA and Murray and Associates had commenced, Mr. 
Mirupasi of Mirupasi Lawyers filed Change of Lawyers with the National Court [on behalf of 
Manoburn (WS 285 of 2000)] on 30 May 2002. 

44. 16 July 2002: Mr. Damem advised PKA to continue to act for the State in WS 285 of 2000 
after terminating their services on 5 th June 2002. 



408- 



Notice Motion dated 22 nd July 2002 PKA on behalf of the State seeks orders to dismiss 
the proceedings etc... The Notice is supported by the Affidavit of Mr. Alexander 
MacDonald, Senior Lawyer with PKA. 

31 st July 2002: Murray and Associates Lawyers cease to act for Manoburn. 

Likewise, prior to the execution of the Deed of Release, Mr. Gelu raises the same issue with 
the Attorney General on 6 th August 2002. Whilst negotiations were on foot between Mr. 
Kerenga (Managing Partner of Posman Kua Aisi Lawyer) as Lawyer for the State and 
Lawyers for Manorburn on assessment for damages, the then acting Solicitor General Mr. 
Zacchary Gelu decided to setde the matter out of Court. 
(See Folder "13B" of "13B" and Attachment "E") 

A submission made by Mirupasi Lawyers on 'quantum' assessing damages at K12.5 million 
was quantified and on a without prejudice basis submitted to the then acting Solicitor 
General Mr. John Kumura. Mr. Kumura advised the plaintiff through Mirupasi Lawyers that 
the Deed of Release entered into between the State and Manoburn and the letter to Finance 
clearing it for payment was not binding and that in his view would require being re- 
negotiated. 

Lawyers at the Office of the Solicitor General in consultation with the former Attorney 
General, Mr. Fred Tomo advised that the State would save millions of Kina in damages, 
interest and costs. State lawyers were concerned that if they were to go for assessment of 
damages, the figures would be very high given the date of the filing of the Writ to the 
eventual settlement including costs. By the terms of the Deed of Release, the State would 
save the 'interest' and 'cost component' of the claim and possibly K6-7 million in 'general 
damage. 



409- 



I 

50. /j On July 31 s 2002, pending trial for assessment of damages, the former Solicitor 
General, Zacchary Gelu, without authority of the then Attorney General, Francis Damem, 
entered into a Deed of Setdement ("Deed") with Manoburn for 

I K8.6million arising from proceedings WS No. 285 of 2000. Deed of Setdement * executed 
between the State (Gelu) and Mr. Titipu (Vincent Mirupasi signed as witness). 

51. Mr. Gelu also cleared the Deed of Release for immediate payment by the Department of 
Finance. 

52. Judgement on liability against the state was entered in August 2000 with damages to be 
assessed. 

- Responses from OPIC 

53. The Commission received a response from a Mr. Leo Ruki, current Project Manager by letter 
dated 14 th August 2009 and stated as follows; 

"...The Department of Works (DoW) was responsible for construction of these agricultural roads. It is during 
this period of time that Manoburn Earth Moving mas engaged in the construction of roads in the Oro Province. 
The Managing Director, Mr. Timothy Titipu was heavily involved in the road constructions and progressed well 
among other local Contractors. The roads that the Contractor constructed, including Manoburn were tractor 
trailor track roads.... 

54. Mr. Ruki's assessment of Manoburn's reputation was that OPIC recognized that it had the 
capacity to handle other projects quite competently and had established itself in Oro 
Province. OPIC had engaged the company in other projects apart from the 12 roads the 
subject of our review. 

- Technical Reports by Engineers, Department of Works 



410 



The Commission reviewed three (3) Technical Reports prepared by Consultant Engineers 
from the Works Department which sets out their inspection of the work and the applicable 
payment for each scope of work completed by Manoburn. The Reports are as follows: 

(1) Infrastructure Project for the Oil Palm Industry in Oro Province- Report on 
claims by Manoburn Pty Ltd (also known as Manoburn Earthmoving Pty 
Ltd) in respect of twelve contracts awarded to and executed (or being 
executed) by Manoburn Pty Ltd 

This report was prepared by D.P. WANIGASEKARA-MOHOTI on 16 th February 
2000 for the then Secretary for Works, Mr. AJ Niggins and submitted to the Solicitor 
General on 17 th April 2001 for assessment of the claim on behalf of the State. 

(2) Opinion to the acting Solicitor General dated 17 th April 2001 and titled "Brief 
Comments on Claim by Manorburn Earthmoving through Shepherds 
Lawyers dated 6 th October, 1999. 

This report was prepared by S. PANCHACHARAVEL, Project Director (J.B.I.C. 
Projects). In the report the Director assessed each of the 12 contract performed by 
Manoburn and the additional claims (including total interest commuted every six 
months with 20% mark up at K85, 482.66 

(3) Report dated 24 th January 2000 titled "Oro Oil Palm Industry Corporation 

(OPIC) Programme Contractual Claim by Contractor Manoburn Earthmoving 

Ltd* 

(Refer to Attachment "G" and Folder "7" of "13B") 

The Reports were made available to the Office of the Solicitor General as a result of the 
letter of demand dated 6 th October 1999 from the law firm acting for 



411- 



Manoburn that the claim for K804, 053.94 be settled by 15 th October, 1999. There is 
evidence that Mr. Gelu had written to the Department of Works by letter dated 23 rd 
November 2000 seeking their opinion on the 'quantification 5 ad demanded by Manorbum'. 
However Mr. Gelu chose to ignore the expert opinion on the progress claim on each contract 
and the calculation for payment on each of the disputed claims. 

57. Our review of the huge volume of technical documents and report over construction 

payments between Manoburn and the DoW, the technical advisors have quantified the claim 

and estimate the progress work at K600, 000.00. 
-WS 1343 of2002 

58. The then Attorney General, Mr. Francis Damem then issued instructions to the Department 
of Finance to put a stop payment on the settlement by way of the Deed of Release and then 
filed proceedings in the National Court under WS 1343 of 2002 alleging fraud, breach of 
section 61 of the Public Finances (Management) Act, breach of section 13(2) of the Attorney 
General's Act and on the grounds that Mt. Gelu acted ultra vires the powers of the Attorney 
General. 

59. The decision of the Supreme Court in State -v- Zacchary Gelu <& Manoburn 
Earthmoving Limited (2003) SC 716 (August2003) confirms that; 

"where the State is a party in any litigation before the Courts, the SG may act as an advocate if instructed to do 
so by the AG in accordance with s.13 (2) of AG Act. Where SG is instructed, he must act in accordance with 
the instructions of the AG, such as to settle or not to settle a mater" and further 

"the AG by virtue ofs.5 of the AG Act is the principal officer who represents the interests of the State in terms of 
legal advice or opinion and where the State is a party before the court. It would follow from this that the AG may 
issue suits in the name of the State (s4 of CB AS Act) "(pages 12 and 13-14) 



412- 



Payout by Department of Finance 



60. 



61. 



The Finance Cashbook confirms that about K5, 050, 000.00 has been paid to the Manoburn. 
The following payments have been made to Manoburn; 



Date 


Company 


Description 


Cheq 
No. 


Amount Paid 


4/10/2002 


Manoburn 
Earthmoving 


Payment of 
C/Order W 


698466 


500,000.00 


6/12/2002 


Manorburn Ltd 


Payment for 
upgrading 


705097 


50,000.00 


25/01/2003 


Manoburn 
Earthmoving 


Part Pay.-SG 7- 

1947 


710194 


1,000,000.00 


14/02/2003 


Manoburn 
Earthmoving 


P/Pymt for O/S 
Deed 


712070 


500,000.00 


02/06/2005 


Manoburn 
Earthmoving 


Cancelled 


812545 


300,000.00 


3/06/2005 


Manoburn 
Earthmoving 


re-issue of Chq 

#812 


812575 


1,000,000.00 


3/06/2005 


Manoburn 
Earthmoving 


Pmt of o/s DOR- 

WS 


812544 


1 000,000.00 


28/06/2005 


Manoburn 
Earthmoving 


Payment of O/S 
Court O 


814191 


1,000,000.00 








Total 


5,050,000.00 








paid 





ascertain whether the above eight (8) payments were paid out from either budgeted funds or 
the Trust Fund Suspense Account # 2. On the 02 nd of June 2005 DoF released a cheque No. 
812545 of K300, 000 and endorsed as cancelled. The Commission was unable to verify with 
the Central Bank and Commercial Banks on the cancellation of the cheque and whether or 
not Cheque 



413- 



No. 812544 in the amount of Kl, 000,000 dated 03 rd of June 2005. Was reissued and cashed. 



62. It is a statutory requirement that under Section 61 of the Public Finances 
(Management) Act 1995, the Minister responsible for finance will approve contracts 
above Kl, 000,000.00. In this instance, the Solicitor General did not seek the approval 
of the Minister for Finance at the time he settled the claim. 

DOCUMENTS PRODUCED FOR THE COMMISSION BY VINCENT MIRUPASI 

LAWYERS 

(Refer to Folder"13A" of "13B") 

63. Mr. Mirupasi provided to the Commission a by letter dated 10 July 2009 a chronology on the 
history of claim and the court proceedings involving the parties. 

64. In his letter of 10 th July 2009 to the Commission, Mr. Mirupasi confirmed that a total of K4 
million on the Deed was paid to his client. The following were payments made to Manoburn 
(according to their records); 

1. K500,000.00 -4* October 2002; 

2. Kl million - 27 th January 2003 (Deposited with the Central Bank in Treasury Bonds); 

3. K500,000.00- 14 th February 2003; 

4. IC1 million - 7 th June 2005; and 

5. Kl million-30 th June 2005 

65. With regard to the remaining balance, the firm advised 

'We then applied under OS No. 698 q/2006 to confirm the Deed of Release for enforcement and for our client to be the 

balance ofK4.6 million still outstanding. The Court on 21 st May 



414- 



2007 held that the Deed of 'Release was current and enforceable and that the outstanding sum- 
should be paid. This decision is subject to an Appeal under SCA No. 10 of2008. This appeal 
was also not prosecuted and we filed an application before the Supreme Court for dismissal for 
want ofprosecution and this was heard on the 3f_]une 2009 and a decision is pending. 

The K1 million with the Central bank was restrained by a Consent Order to hold until 
completion of the proceedings. After the dismissal of the proceedings under WS 1343 of2002 we 
applied for the withdrawal of these funds but Messrs Gadens Tawyers acting for the Central 
Bank asked for specific Orders as the Ombudsman Commission had also issued a Directive not 
to pay until its investigations were completed. We then issued proceedings under OS No. 503 of 
2006 seeking Declaratory and Directive Orders. These Orders were made on the 4 th September 
2006 and subsequently monies in the sum oj C K1 ,266,605.00 (which amount includes interest) 
was paid to our client on the 8 th September2006. " 

66. On 30 th July 2009, Mr. Mirupasi personally appeared at the Commissions hearing 
with Mr. Timothy Titipu and sought adjournment of our inquiry into the claim for 
the reason that a Supreme Court Appeal filed by the State had been argued and a 
decision was pending. 

(Refer to Transcript of proceedings COIFINANCE 119 dated 30 th July 2009- 
Pages 4260-4264) 

EVIDENCE RECEIVED AT HEARING OF THE COMMISSION 

Mr. John Kawi 

Former Solicitor General 

(Refer to Transcript of Proceedings COIFINANCE75 dated 25 th February 2009, 

pages 2138 to 2233) 

67. The evidence he provided is reproduced below (pages 2187 to 2189) 



415- 



"When I resumed in March, this was one of those matters that was brought to my 
attention and I requested for the file when it was brought to my attention and I 
immediately noticed the deed of release signe d bv Gehi fnr 8.6 million and I was not 
satisfied . So, I requested Vele Iamo not to pay out this claim until we properly 
investigated it. I went back to th» Department of Works and I saw the deputy Secretary 
then. Roy Momo.j r went and we had a meeting on this and they too were surprised that 
thi s matter was being settled for 8.6 million and I asked if they could carry nu t an 
investigation. There was a Sri Lankan engineer. He has got one nf those very long 
names which is pretty difficult to mention. I only called him Mr Mohoti. That is 
probably his first name and this engineer did carry out an investigation. He went to Pro 
for that purpose, he went across to Pro and he carried out an investigation - well, what 
he said was an investigation. I had to rely on him as being the person who carried out the 
investigation and he came back and he gave me a report. This was sometime in July or 
September 2001 - appropria te September2001 . He gave me a report saying that if it 
was - they looked at all the claims and then their view was that only for stand down of 
equipments that Works Department issued a stop work order wMch resulted in the 
Company allegedly making losses. So he said, "this appears to be the only aspect of that 
claim" which was quite valid. All the others nogat. So in his report he said for that he 
was entitled to some 186.000. We put that to Manoboum, Timothy Titipu was the 
proprietor of Manoboum and they refused. They refused to accept it so by then it was also 
during the period of my suspension too so, although my suspension was not long. I was 
suspended - all these things remained in abeyance. When I came, one of the things I also 
learned was that representations were being made even to Francis Damem the Attorney 
General and I advised Damem to brief this matter ou t which he agreed. So the matter 
was then briefed out to K eren ga Kua of Possman Kua Aisi Lawyers and they were then 
handling the matter. J 



416- 



he lped them. I did an affidavit for them when they were trying to set aside the matter. So 
that is my involvement in the Manoburn. 1 2.25 pm] When I got the file to look at the 
settlement Gelu did, it was just a deed of release typical in this kind of settlement, just 
a deed of release and no supporting document. I questioned every lawyer in the office as 
to who did this settlement and eventually one of our legal officers, one of the those 
officers we just recruited, when he finished from LTI in 2000. he told he said. "Gelu 
directed me to do the submission. " and I questioned him I said, "when you did the 
submission? What are the other supporting materials?" He said he had none, except 
that Gelu told him to make submission for 8.6 million and the submission I am 
referring to is not one which between lawyers, proper negotiations and submission. This 
was the letter to Finance requesting 8.6 million and I must say that I was quite 
surprised myself too when there was no documents on file justifying how you arrived at 
the amount of 8.6million. So that was it." (Underlining ours) 

Mr. N. Gopave 

First Assistant Secretary (Operations)-DoW 

68. Mr. Gopave appeared briefly on 30 th July 2009 and advised the Commission that he was 
short served and was not prepared give evidence. He was at one time involved in the project 
as Head of the Operations and fully aware of the project and the problems associated with it. 
He gave an undertaking to the Commission to provide a cost on the project based on the 
work component and to determine whether the payment of K8.6 million was justified. This 
matter was pending production of the calculated costs which remains pending. 

Further Evidence-Witnesses yet to be called 

69. Vincent Mirupasi, Principal of Mirupasi Lawyers and Associates 



417- 



To be recalled to provide an explanation on the legal costs of K2million paid to his 
Law Firm for the Manoburn claim. To be further investigated. 
70.. Kerenga Kua, Executive Managing Partner of Posman Kua Aisi Lawyers 

Counsel for the State and his evidence will be on the instructions to defend the 
State in all the proceedings to date. He will also assist the inquiry with information 
that there was a lot of political pressure exerted by the former Minister for Justice, 
Mr. Puri Riung on the claim by Manoburn. Mr. Kua did not attend the Inquiry due 
to work commitments. Mr. Kua was unable to provide evidence and is required to 
assist in any further inquiry on the matter. 

71. Timothy Tititpu, Managing Director of Manoburn 

He could not give evidence due the application made by his lawyer, Mr. Mirupasi 
on 30 th July 2009 

72. Zacchary Gelu j | 76. 

i' 
Former Acting Solicitor General at the time he executed the Deed of Release j 
between Manoburn and the State. Requested to assist the inquiry and has so far 
responded by applying for adjournment due to ill-health and stress. (Medical 
Certificate produced to the Commission) On record, Mr. Gelu was provided with 
all the relevant documents in so far as the Deed of Release is concerned. 



7. 



Private Practitioner and at the time he was a Legal officer assigned with the Manoburn file. 
He responded to the request to assist the Commission on the matters concerning his 
involvement and he has informed the Commission that he would be available in October 
2009. He had a full calendar of court commitment 

418 



78. 



COMPLIANCE WITH PROCESS-REQUIREMENTS OF THE CLAIMS BY 
& AGAINST THE STATE ACT, 1 996-(CB<&SAct, 1996) 

Section 5 notice was given to the Solicitor General by Shepherd Lawyers on 6 th October 1999 
and is pleaded at Paragraph 3 of the Statement of Claim under WS 285 of 2000 

The Claim: Liability and Assessment 

The Company pleads under paragraph 7 of the Statement of Claim (WS 285 of 2000) on the 
States failure and refusal to certify the interim progress payments under the contracts within a 
specified time and therefore was entitled to late payments and interest at the current 
commercial bank rates. The initial claim was for some K481, 739.00 sum representing 
various damages for late progress claim payments and loss of business. 

The amount of K8.6million as out of court setdement on 31 July 2002 was inflated without 
any proof that the State was responsible for causing financial hardship to the Company as a 
result of the dispute on the delay in progress payments. The amount as assessed was 
excessive and fraudulent as it was settied without basis in law. 

The State was not responsible for costs incurred by the Company in relation to the providers 
of service namely Kinhill Kramer and RAM Consultants. That aspect was not covered under 
the MWC. 

Steps taken (not taken) by the Solicitor General in defence of the claim The Solicitor 
General (Ms. Kiele was acting SG at the time the claim was registered with the SGO) failed 
to file the NOID and Defence on time and a default judgment entered against the State. 



419- 



79. Ms. Kiele, then Solicitor General attempted to file Notice of Motion and Affidavit in Support 
(David Lambu) to have the Default Judgment set aside with the Notice of Motion and the 
Affidavit in Support (D. Lambu) dated 30 March, 2000 but filed with the Court on 2 nd 
August, 2000. Default judgment was entered against the State on 11 August 2000. That only 
means that the Solicitor General was in breach of its duties and responsibilities under the 
Attorney General's Act 

Steps taken (not taken) by the Attorney General in defence of the claim 

80. The Attorney General (Francis Damem) was genuinely concerned at the manner in which the 
Manoburn claim was treated by the Solicitor General. The Commissions view on Mr. 
Damem, particularly the periods February 2001 to August 2001 where he did the following:- 

(a) Instruct PKA lawyers to defend the proceedings with respect to the quantum. 

(b) Advised Mr. Zacchary Gelu that proceedings involving Manoburn was briefed to 
PKA Lawyers and that he was not responsible for that matter. 

(c) With the engagement of PKA lawyers, default judgment was set aside. 

(f) Supreme Court settles the issue over whether the SG can act independent of the AG 
in matters concerning settlements of claims against the State. The AG is authorized 
by law to settle claim against the State 

(g) Ongoing proceedings to deal with the Deed of release and the balance of the 
K3million which is outstanding. 

Settlement 

81. None considered as the acting Solicitor General cleared it without conducting any due 
diligence on the claim and consulting the Department of Works and -or OPIC. 



420- 



82. The matter was to proceed to trial on the assessment of damages which would in the 
circumstances be appropriate as there was no dispute that work may have been done as 
claimed by Manoburn. This was verified by the DoW through the Technical Reports and 
that would have served that purpose. 

83. The setdement was far too excessive and without doubt inflated based on other heads of 
damages which were not tied to the initial claim for the delay in payment on the work 
performed by Manoburn under Contract. 

Pay-out - Department of Finance compliance or otherwise with Public Finances 
Management Act and related process. 

84. DoF had paid by installment based on the Deed of Setdement. The balance of K3 million is 
the subject of an appeal to the Supreme Court pending a decision. 

85. The Department of Works paid an amount of K10, 543.33 to Lawyers acting for the 
Manoburn and the cheque was returned based on the proceedings and that ' 

86. Manoburn was seeking damages for breach of contract and that the actions of the DoW the 
contracts have been frustrated. (Sheperd Lawyers by letter dated31 March 2000) 

FINDINGS 

87. The lack of professional and management oversight of the claim was the major 
contributing factor at the Office of the Solicitor General. 

a. The lack of initiative to deal with the letter of demand by the Solicitors of Manoburn 
on 6 th August 1 999 proposing to file a claim against the state for breach of contract. 
At that time the demand was for an amount less than Kl million. 



421- 



b. The lack of initiative to consult the Department of Works to obtain the necessary 
information for the purpose of making a decision whether to negotiate and settle the 
demand for payment or defend the proceedings. 

c. The lack of initiative to mediate a settlement of the dispute over progress claim on 
behalf of the State, because there is proof from the technical advisors report confirm 
that progress claims for work done was quantified at below Klmillion. 

d. The huge turn-over in the position of the Solicitor General (Kiele/Gelu/Kumura) has 
caused a loss of cohesion in the manner in which this proceeding has dragged on in 
the courts. 

e. The Solicitor General (including the Solicitors for Manoburn) had also overlooked the 
provisions dealing with Arbitration under the contract which was the appropriate 
dispute mechanism to mediate the dispute on the delayed payments by the 
DoW/State. 

f. The negligence of the Solicitor General in 1999 in failing to file the Notice of 
' Intention to Defend' and the 'Defence' within time, resulting in a default judgment 
entered against the State. 

a. That negligence on the part of the office of Solicitor General has caused the 
State to incur moire expenses with the engagement of PKA Lawyers to 
institute proceedings on behalf of the state to set aside the default judgment in 
2002 including the issue of the AG/SG powers and the Deed of Release. 

b. The accumulation of costs and payout on the Deed of Release (now in arrears) 
has adversely affected the budgetary appropriations. 



422- 



The Deed of Release 

88. The Commission makes adverse findings against Mr. Gelu's conduct in the 
setdement of the claim as follows; 

a. He had formed a professional view on the matter and had compromised the 
office of the Solicitor General by accepting the financial difficulties and losses 
of the business and the prolonged court proceedings (Cash Flow 
Statement)when in fact 

i. Manoburn had also contributed to the problem by the frequent change 
of lawyers and its instructions (Shepherd Lawyers/Blake Dawson 
Waldron/Murray and Associates/Mirupasi Lawyers) 

ii. Manoburn had refused to accept the cheque of about Kl 0,000.00 and 
returned to the DoW. 

iii. The State was not responsible for the losses suffered by Manoburn and 
the costs incurred for professional services rendered by Kinhill Kramer, 
RAM Business Consultants, the costs of profits for the last three years to 
31 December 1999 at K750,000.00,' net profit for next 3 years at 
Kl,050,000 and existing claim. These were not pleaded by Melbourne in 
WS 285 of 1999 and not verified. 

89. Failed to comply with section 61 of the Public Finances (Management) Act where 
Ministerial approval is required for expenditure in excess of K300,000 and above. 
He did not obtain that approval prior to the execution of the DOR. 

90. The Solicitor General also failed to comply with NEC Decision No 150/2003 of 
25 th July 2003 wherein the NEC directed the 



423- 



(i.) The Solicitor General in consultation -with the Attorney General were directed to settle 
any future claims for amounts up to Kl ,000,000 provided they were satisfied with the 
claims were genuine ;and 

(ii.) All amounts for out of Court setdement in access of K1,000,000 are to be approved by 
the NEC prior to any payments being made by the Department of Finance; and 

(iii.) Approved that the Attorney General immediately apply to the court for Judicial Review 
of any questionable claims or out of Court settlements in excess of K500,000 

90A. Where claims are pursued in court, once liability and damages are ascertained, the court may be 
asked to order that a party pay the costs of the other party. The State like any other party in 
court proceedings may be found liable to pay the costs of the other party or where the State 
is successful, the Court may order that the other party pay the State's costs. In either case, 
where there is no agreement as to the amount payable for costs, the avenue available under 
the National Court Rules is to have the successful party's costs taxed. 

Taxation is also available to a client who is entitled to dispute the lawyer's legal fees. As such, 
unless there is prior agreement as to costs payable, the State is entitled to dispute the legal 
fees of the law firm briefed by the Attorney General. 

The Commission notes the award for legal costs against the State following 
dismissal for wanfof pros A etlfiotT-of~pfO€ A dings commenced by the State in this 
matter. Costs were taxed at K2 milljem. The matter warrants further inquiry to 
ascertain whether the costs A tfere justified; RECOMENDATIONS" 



424- 



91. The Office of the Solicitor General through its lawyers (if PKA is still retained as lawyer on 

record) to institute proceedings in the National Court to have the deed of release declared 
null and void. 

92. That the State institute proceedings to recover the amount of moneys paid so far and to 

conduct a review as to what was the reasonable losses incurred by the Company. 



425- 



(c) Pioneer Construction Ltd 
PARTIES 

(i) For the State 

(a) Department of Works 

(b) Attorney General/ Solicitor General 

(c) National Court Registry (Waigani/Mount Hagen) 

(d) Department of Finance 

(ii) For the Claimant 

(a) Mrs. Gertrude Arete (widow) Director of the Company) 

(b) Maladinas Lawyers (now practicing as Young and Williams) 

(c) Pato Lawyers (now practicing as Pacific Legal Group) 

DOES THE CLAIM FALL WITHIN THE TERMS OF REFERENCE 

The Company was paid a total of K 4.1 million by the Department of Finance in 
satisfaction of the Deed of Release which was executed between the State and 
Maladinas Lawyers (Lawyers on behalf of the Company) on 26 th November 2002. 

The applicable TOR are (a) (1) ((i) to (xii), 5 (i) to (vii), 8 and 12. 

THE BASIC FACTS THAT ARE ALLEGED TO GIVE RISE TO THE CLAIM 



The Company was awarded Contract No. MWC-MR-001/99 Tomba to Tambul Road 
upgrading project byway of a Certificate of Inexpediency (COI) for a value of K3, 878, 15 1.00 
on 1 1 th March 1999. The then Secretary for Works, Mr. Micky 



426- 



Tamarua approved the engagement of Pioneer Construction on the road works project. 

Pioneer Constructions was registered PNG Company that carried on the business of 
earthmoving and civil engineering construction work. The Company shareholders /directors 
were Mr. Timothy Arete (now deceased), Gertrude Arete (widow), Shirley Arete (daughter) 
and Pius Kunji (now based at Tabubil) as the Secretary to the Company. At the time the 
company was awarded the contract, it was effectively winding up (Refer to Mr. Joel 
Luma's letter dated 6 th May 2009 to the COI and the attached advertisement). 

A Deed of Release was entered into between Mr. Zacchary Gelu as the then acting Solicitor 
General (on behalf of the State) and Maladinas Lawyers (on behalf of the Company) on 26 th 
November 2002. The parties agreed to settle the claim for K3,287,710.00 for unpaid 
progressive claims for services rendered by the company and for damages caused by vandals 
to equipment, site offices and properties belonging to the company left on the work site over 
a period of two years (from 24 th August 1999 to 2001). The company suspended operations 
at end of October 1999 after a period of 7 months alleging delayed unpaid progressive claims 
against the Department of Works. 

The Department of Finance has paid the claimants K4. 109. 988. 70 . Below is a schedule of 
payments obtained from the payments vouchers sighted from documents received from the 
Department of Finance. 



Schedule of Payments as per DoF Payment Vouchers 



No. 


Date 


Reg. 


Vote 


Amount Paid (PGKm) 


Remarks 


FileRef 


1 


21.03.00 


10038 


207-4201-4123- 135 


959,988.70 


c/Pato Lawyers T/A 


56-FD 


2 


28.11.02 


63479 


460-31 


1,500,000.00 


c/Maladinas T/A 


74-FD 


3 


04.04.03 


16725 


207-4201-4123- 135 


100,000.00 


c/Maladinas T/A 


15-FD 



427- 



4 


04.04.03 


Chq.739374 


207-4201-4123- 135 


100,000.00 


c/MaJadinas T/A 


10-FD 


5 


22.09.03 


48494 


207-4201-4123- 135 


300,000.00 


c/Maladinas T/A 


25-FD 


6 


31.10.03 


56459 


460-31 


400,000.00 


c/Maladinas T/A 


11-FD 


7 


13.01.04 


Chq. 74581 


460-31 


600,000.00 


c/Makdinas T/A 


9-FD 








Total Paid 


4,109,988.70 







DOCUMENTS PRODUCED FOR OUR EXAMINATION AND 
REVIEW BY THE COMMISSION 

Statements and Correspondence of Witnesses 

The following documents have been reviewed and the following matters have been noted by 
the Commission; 

i- Mr. G, J. Sheppard 

Partner of Young and Williams Lawyers in response to COI request for the file advised 
the Commission that the files have been destroyed after 7 years. Young and Williams 
have taken over the practice of Maladinas lawyers. (Letter dated 26 th March 2009) 

ii. Mr. Joel Luma 

Current Secretary for Works responded in writing to COI Letter dated 23 rd March 2009 
and the Summons dated 29 th April 2009 with relevant and useful information on the 
history of the claim. 

Mr. Luma informed the COI that 

" • •. this road project was initiated in 1 997 under Governor Pais Wing ti and was 
awarded to COECON Ltd. It was shelved after the 1991 General Elections. In 
1999 the second attempt was made to award th e project to Pioneer when clearly 
there was no funding allocation in th e 1999 budget" 



428- 



The relevant information on the letter. - 

• A Minute dated 22 nd May 2000 by Mr. Mohotti, Technical Adviser, Works 
Department to Secretary raising concerns over the manner in which the contract 
was awarded when in fact the project was taken off the Public Investment 
Programme in 1999 (meaning that there was no funds allocated for the project) 

• Mr. Michael Gene's concerns about the actions of Acting FAS (operations) Mr. BK 
Alois to certify the claim when he had no authority to do so. (letter dated 26 June 
2000) 

• Application for Certificate of Inexpediency by Mr. Tamarua to the Chairman, 
CSTB dated 5 th March, 1999 seeking its approval citing 1997 election as the reason 
for delaying the project. No public bids for tender was made by CSTB on this 
contract. 

• An advertisement in the newspaper on the winding up of Pioneer Constructions 
Ltd as of 5 October 1999. The Contract was awarded on 11 th March 1999 by 
Certificate of Inexpediency when the company had gone into receivership. 

• The letter of 8 th .September 1999 by Mr. Alois of Works to PNGBC certifying the 
claim on the four progressive payments to Pioneer was not without authority nor 
did he have the appropriate section 32 financial delegates to do so. 

• Former Minister for Transport, Mr. Vincent Auali's letter of 10 th May 1999 to 
Manager of Pioneer Constructions approving revised schedule of rates. 

• Former Works Minister, Mr. Yawe Rayon letter of 12* June 1999 supporting the 
Transport Minister's call to revise the schedule of prices. 



429- 



iii. The Office of the Chairman, CSTB was summonsed to produce documents in relation 
to the tender/contract on 29 th April 2009 and have asked for extension to locate the 
documents which have being archived. 

iv. Hitelai Polume-Kiele 

Acting Secretary for Justice and Attorney General has been summoned to produce the 
SG file in relation to the claim made by Pioneer Constructions Limited and 
subsequently settlement of the claim by way of the Deed of Release. No response has 
been received to date and the file has not been produced. 

v. Ian Augerea 

Registrar of the National Court has also been summoned to produce the file in relation 
to the claim lodged by Pioneer, but no response has been received to date . 

vi. Mr. Erick Kiso 

Assistant Registrar, National Court Mount Hagen has verbally informed the COI that 
no proceedings have been registered by Pioneer at Mount Hagen. He states that the 
files are normally registered at Waigani. 

vii. Mr. Michael Gene 

Former Secretary for Justice and Attorney General was requested by the Commission 
to assist with information relating to the clearance he gave to the DoF for payment of 
the claim. His letter of 1 8 May 2009 states as follows: 
"In respect of Pioneer Constructions Umited matter, the contract progress payments 
were delayed as the Department of Works didj iot have sufficient funds to meet the 
State's contract obligations for the Tomba/Tambul Road Upgrade Project (■■■)■ 
Mr. B.K Alois. A/Km (Operations) of the Department of Works confirmed the 
outstanding 



430- 



progressive payments to the value ofKl. J59. 988.30 under his letter of 8 
September1999. 

This matter also appears to be in order and I recommend that no further action is required by the COI 

You may also seek further clarification from Mr. Pdmbink Pato, now the 
Principal of Steele's lawyers. » 

viii. Mr Ian Sheperd 

Partner with Blake Dawson Lawyers informed the Commission by letter dated 19 th 
May 2009 that the firm was briefed by the Solicitor General in 2005 to review the 
matter. The letter refers 

"The works was undertaken with the assistance of funding from A.usA.lD and an 
extensive file was in fact commenced under Proceedings WS 1093 of 2005 against 
Pioneer Constructions limited and Zacchary Gelu personally. In the proceedings. 
Blake Dawson obtained judgment for damages to be assessed hut 
unfortunately the State has been extremely slow in paying our fees once the 
AusAID funding ceased and damages have not yet been assessed . (Our 
emphasis) 

Included in the letter were two files relating to the proceedings WS 1093 of 2005. (Refer to 
BDW 2 and 3) 



WITNESSES WHO GAVE EVIDENCE ON OATH 

The following witnesses were gave evidence at the public hearings of the Commission held 
at the Mount Hagen Council Chambers from 18 May to 22 May 2009. 



431- 



The hearing of the claim was recorded into proceedings COIFINANCE 42 dated 
27 th October 2008 at Waigani. 

• Opening submissions on the claim by Pioneer Constructions Limited— (Refer 

to pages 1050 to 1052) 

COIFINANCE 101 dated 18 th May 2009 at Mount Hagen-(Refer to pages 3172 to 
3224) 

• Opening submission by the Commission-(Refer to pages 3172 to 3173) 

• Evidence of Mr. Etick Kiso, Assistant Registrar-National Court, Mount Hagen- 
Confirm that there were no Court Files on Pioneer neither registered nor archived 
in the Mount Hagen Registry. (Refer to pages 3173- to- 3179) 

• Evidence of Mrs. Gertrude Arete, Director of Pioneer Constructions Ltd with 
the assistance of her lawyer Mr. Waifaf,(refer to pages 3215 to 3224) 

o Produced documents 

o Produced a statement on the history of the claim made by the Company 

o Confirmed that her husband died in 2002 

o She confirmed that all the payments were made to Pato Lawyers and Maladinas. 

o She was requested by the Commission to follow up with Maladinas (now Young 
and Williams) on the disbursement of the payments made by Department of 
Finance based on her information that the company had not received any of 
the payments. (We take note that 

43 
2 



a request was made by the Commission for the verification of 
the payments from the Law firms and no further information 
was produced for our records). 

COMPLIANCE WITH PROCESS-REQUIREMENTS OF THE CLAIMS 
BY & AGAINST THE STATE ACT, 1 996-(CB<&SAct, 1996) 

No court proceedings instituted by the Company as evidenced by the lack of 
documents from the firm of lawyers (Maladinas). 

No section 5 notice sighted from the documents produced by Mrs. Arete and from 
the payment vouchers submitted by the Department of Finance. 

Steps taken (not taken) by the Solicitor General in defence of the claim 

There was a lack of initiative on the Solicitor General to carry out due diligence on 
the claim and the failure to file a section 5 notice The State also did not consult the 
Department of Works, wherein the information furnished to the Commission by 
the current Secretary of the Department of Works confirms that the company was 
winding up when it was awarded the contract (Certificate of Inexpediency). 

Steps taken (not taken) by the Attorney General in defence of the claim 

The Attorney General was not consulted by the acting Solicitor General, when he 
executed the Deed of Release 

Settlement 

The settlement was done without consideration of the process under section 5 of 
the Act The acting Solicitor General also acted independent of the Department of 
Works when he settled the claim. 

Pay-out - Department of Finance compliance or otherwise with Public 
Finances Management Act and related process. 



433- 



Despite the fact that the contract was awarded by the Department of Works to the 
Company, the claim was settled by the Department of Finance. This is highly 
irregular and illegal because the provisions in the Contract provide the venue for 
payments to be paid out of funds allocated for the project by the Department 
where progressive payments are approved by engineers from the Department of 
Works and progressive payments approved for each completed work. 

Payments out of the Trust Fund Suspense Account. 

There are two payments made out of the Trust Fund Suspense Account#2. Those 
payments are highly irregular as the managers of the project was the Department 
of Works and therefore if any payments were to be made, it was considered proper 
that the Department would pay of funds approved and allocated for that project 
Any payments made to the claimant by the Department of Finance are considered 
to be outside the terms and conditions of the contract. 

PROCEEDINGS WS 1093 OF 2005 BETWEEN THE STATE -V- 
PIONEER CONSTRUCTIONS LIMITED & ZACCAHRY GELU 

The documents produced by Blake Dawson Lawyers reveal that proceedings were 
instituted on behalf of the State to set aside the Deed of Setdement. On 17 th May 
2006, the firm obtained judgment against Pioneer and Gelu and the Deed of 
Release was set aside. The firm ascertained that at least Kl 00, 000 was paid to 
Pioneer pursuant to the Deed of Release. 

Department of Finance payment vouchers confirm that about K4, 109,988.70 
have been paid to date. The break-up of payment includes one payment of 
K959,988.70 paid into Pato Lawyers Trust Account and the balance of 
K4,050,000.00 paid into Maladinas Lawyers Trust Account. There is a need for 
further inquiry into the payments made to Pato Lawyers Trust Account and 
Maladinas Trust Account for the reason that the widow of the claimant has 



434- 



informed the inquiry at Mount Hagen that they have not received any moneys, the 
subject of the deed of settlement. 

The only aspect of the matter remaining is the enforcement of judgment based on the orders 
obtained by BDW on behalf of the State. 

THE COMMISSIONS OBSERVATIONS ON THE FACTS AND EVIDENCE 
UNDER REVIEW 

The engagement of Pioneer Constructions to undertake the sealing and road works of the 
Tombe Road is irregular, as the documents produced by the Department of Works indicate 
that the company was winding up. The contract was also awarded under very suspicious 
circumstances and the payment of K4million is questionable. 

OUR FINDINGS 

(Reference is also made to the Statement of Claim by the Lawyers for the State in WS 1093 
of 2005 Between the State -v- Pioneer Constructions Ltd and Zacchary Gelu which pleads 
the matters which are consistent with our findings) 

1 . Pioneer was awarded the Contract in April 1 999 to upgrade Tomba to Tambul Road. The 
Contract was awarded to Pioneer Constructions for the sum of K3, 878, 151. 00 on 13 th April 1999 
by Mr. Henry Veratau, then Chairman of Central Supply and Tenders Board A The Central 
Supplies and Tenders Board failed to observe the procurement process under the Public Finances 
(Management) Acthy calling for public tender for the Tomba to Tambul Road upgrade, y The 
manner in which the contract was awarded to Pioneer i.e. with a Certificate of Expediency is highly 
suspicious and irregular, because there were more reputable companies capable of providing such 
services to the State. 



435- 



2. On 24 th August, 1999 Pioneer informed Works that they "will stop work" 

and wait for outstanding progress claims to be paid in full. (This was done on the basis of 
differences between the Company and the State over unpaid progress payments. 

3. Work was suspended at the end of October 1999. On the 27 th July 2000, Pioneer issued 
another letter of demand to the State. 

4. Between 24 th August 1999 and sometime in 2001, Pioneer's equipment, site offices and 
storerooms that were left on site were vandalized. (The company failed to secure all its 
equipment at the time it suspended its operations) 

5. Maladina's lawyers (Mr. Sheppard) in a letter dated 24 th October 2002 proposed its claim 
against the State, outlining the facts alluded to above as the basis of Pioneer's claim and 
sought a claim for K3, 287, 710.00 (including Idle Time Costs/Equipment Vandalized/Site 
Office and Storerooms vandalized 

6. Mr. Gelu, then acting Solicitor General having considered the letter, prepared the Deed of 
Release by actually adopting the content of the letter. On 26 th November 2002, Mr. Gelu (on 
behalf of the State) executed the Deed of Release with Mr. Sheppard of Maladinas (on behalf 
of the Company) 

7. Mr. Zacchary Gelu failed to carry out any due diligence on the basis of the proposal by 
Maladinas Lawyers to institute proceedings against the State on the purported claim that the 
State's delay in making progressive payments caused the Company to suspend its operation. 
The failure to undertake any dnp diligence is based on the fact that the Solicitor General and 
orliirufScers 

y Did not consult the Department of Works who were implementing the minor works 
contract on behalf of the State. 



436- 



> The Arbitration Clause (Clause 11) in dealing with Disputes was never referred to by 
Pioneer. 

> No section 5 notice under the CBAS Act was given including a request to seek an 
extension of time to file proceedings in the National Court. This condition precedent 
was not satisfied by the Company. 

> There were no Court proceedings instituted by the Company. 

> The inclusion of Idle Time Costs/Equipment Vandalized/Site Office and Storerooms 
vandalized claim was the result of the Company's negligence in securing all the assets of 
the company when it suspended operations. The State was Only responsible for ensuring 
that the Company complied with the terms and conditions of the contract and to 
upgrade the road within 12 months. 

> The failure to conduct proper searches at the Registrar of Companies would have 
revealed that the company had wound up on or about 5 th October 1999. It is noteworthy 
that Managing Director of the Company suspended operations in October 1999, which 
also coincides with the advertisement that the company was winding up. 

> He failed to give due regard to the provisions of section 61 of the PFMA where approval 
for amounts over K300,000.00 are approved by the Minister. 

> He failed to give due regard to the directives of the NEC as per NEC Decision NG 
07/2002 at paragraph 10 on the direction that there be no more out of court settlements 
by any State body or authority including the Attorney General and the Solicitor General 
without the approval of the NEC acting on the advice from the CACC. 

> He also failed to give due regard to NEC Decision 150 of 2003 on conducting a review 
of all claims cleared by the AG for payment. 

RECOMMENDATIONS 

1* The Office of the Solicitor General to consult with Blake Dawson Lawyers and 
ensure that the National Court Orders dated 17 th May. 2006 and 10 th July 2006 



437- 



under WS 1093 of 2005 setting aside the Deed of Release be pursued andj jy^ regard be given 
for the enforcement of the judgment without delay . 

2. That Mr Zacchary Gelu not be considered for any future appointments to a public office. 

3. That the awarding of minor road works contract by the Department of Works be made 
subject to the tendering procedures under the Public Finances (Management) Act, 1995 



438- 



(d) Orosambo Limited 
Introduction 

Terms of Reference (ToR) 

This claim is subject to the ToR of this inquiry in that:- 

1) payments made to date stands at K3, 432,168.90 (inclusive of cancelled cheques 
totaling to K850,000) (per PGAS Cash Book Report - Dept of Finance!) which is 
in excess of threshold for claims above K300.000 which is the subject of this 
investigation; 

2) payments to date were made between 2003 and 2004 thus fall within the period 
between 2000 and July 2006 which is the subject of this investigation; 

3) manner and conduct of those involved within the various state offices and agencies 
authorising and processing this claim appear as serving their own interests (and 
not the interest of the State) and that these parties may have compromised or 
subverted the standing protocols, processes, procedures, orders to accept this claim 
in a fraudulent and illegal manner . Hence, forms the basis of this inquiry's 
investigation. 

Source(s) of where Evidence was collated 

For the purpose of this inquiry, files were accessed from the Solicitor General's 
office (SG), the National Court Registry (NC), Dept of Finance (FD) and other 
locations/offices deemed necessary to inquire into this claim. 

Legislations cited for this claim 



439- 



To present the findings of the Commission before a hearing on this matter 
investigated; relevant acts and legislations referred to include (but not limited to):- 

1 . Claims By and Against the State Act (1996) 

2. Public Finance (Management) Act (1996) 

3. Attorney General's Act 

4. Wills Probate and Administration Act 1966 

5. Public Curators Act 

6. Companies Act 1997 

7. Frauds and Limitations Act 1988 

National Executive Council Decisions 

1. Decision No.NG07/2002:- 2002 Supplementary Budget and Framework for the 2003 
Budget 

2. Decision No. 150/2003:- Claims By and Against the State and Judgment Debts 

3. Decision No. 21 /2006:- Out of court Settlements - By way of Deeds of 
Settlement/Release 

Facts/Evidence 

Background of the Claim 

This is an alleged claim for breach of an agreement for construction of road works in Oro 
Province. The Oro Provincial Government (f Defendant) and the State (2P d Defendant) 
were sued by Orosambo 'Enterprise ~Limited (Plaintiff) for failing to honour the terms and 
conditions precedent in the said agreement where the 1 st defendant was unable to pay the 
required monies to the Plaintiff for services rendered since 12 September 1989. The liability 
and damages to this claim were admitted and assessed by way of default judgement 
sanctioned in Court on the 17/5/1993 and enforced by a Court Order for the 1 st Defendant 
to settle. The claim has been progressively settled in instalments so far amounting to a total 
of 



440- 



K3,432,168.90 90 (inclusive of cancelled cheques totaling to K850,000) being paid 
out of the Waigani Public Accounts. 

Background of the Company - "Orosambo Enterprise limited" suing the 
Provincial Government and Independent State of PNG 

(a) On 25 March 1985, the late Godfrey Orosambo and Jack Bonard Orosambo 
incorporated a company called Orosambo Enterprise limited ("Company"). The 
company was registered on 13 August 1985. Late 
Godfrey and Jack were held five (5) shares each and they were the only shareholders 
and directors in the company. 

(b) The Commission confirms that a "Certificate of Incorporation" - No. 
CI 09922 was issued to the Plaintiff. 

Agreement or Contract of Service 

(a) On the 11 th April 1987, by an agreement made in writing the l st Defendant (Oro 
Provincial Government) agreed to engage and pay the Plaintiff (Orosambo 
Enterprise Limited) for maintenance on all the roads throughout the Oro Province 
and the Plaintiff agreed to provide that service. 

(b) Under Clause 2 of the agreement the period of contract was to be for five years 
commencing 1 st May 1987 and ending 31 st April 1992. 

(c) Under Clause 4 and 5 of the agreement the contract pri ce was stipulated at K300.000 
per annum payable at equal monthly instalments. The contract of service is for five 
(5) years and is valued at Kl ,500,000 and that the Public Finance Management Act 
would apply. 



441- 



(d) Under Clause 13 of the agreement the contract may be terminated by either party at the 
expiration of three months after the date on which notice of such termination is 
served on the other party except that by mutual consent the said period may be 
reduced or waived. 

Compliance with Section 5 Notice: Claims By and Against the State Act 

(a) This piece of legislation although relevant because the State was initially joined in the 
proceedings as second Defendant however does not apply given the fact that the 
proceedings commenced in 1993 prior to the establishment of the Claims By and 
Against the State Act 1996. 

(b) Further, proceedings on this claim was made against the Oro Provincial Government 
under Section 12 of the Organic Law on the Provincial Government and Section 2 of 
the Legal Proceedings By and Against the Provincial Government Act 1977. 

Claim - Cause of Action 

Facts of the Matter - Breach of said contract 

(a) The Plaintiff is suing the Oro Provincial Government (1 st Defendant) and the State 
(2 nd Defendant) under Section 2 of the Claims By and Against the State Act for 
breach of contract by failing to make payments for services alleged to have been 
rendered by the Plaintiff under the said contract and claiming for damages suffered in 
the amount and time prescribed and pleaded in the Statement of Claim. 

(b) The said contract was not terminated but specific provisions of the said contract in 
relation to clauses 4 and 5 were breached. The Oro Provincial 



442- 



Government did not have the funds available to setde the on-going riaims made by 
the Plaintiff. 

(c) Liability: Although the said contract was signed and sealed without the Ministerial 
approval of the Department responsible for Finance thus 
bringing the validity of the contract into question; liability had been incurred resulting 
from breach of the said contractby the 1 st Defendant (Oro Provincial Government). 

(d) Damages: damages should be claimed for loss suffered due to nonpayment of 
services rendered, if rendered at all; and in the period under the said contract but 
subject to assessment. 

Court Proceedings - under WS # 53/1993 

(a) On the 26/2/1993, Orosambo Enterprise Limited filed a Writ of Summons - WS # 
53/1993 along with a Statement of Claim in the National Court through its lawyers, 
AMNOL Lawyers. 

(b) The Statement of Claim contained in the WS # 53/ 1993 para (9) states that on the 9 th October 
1989 the Plaintiff ' wasfmstratedfrom continuing to provide the agreed services due to non-payment oj any 
monies by the 1 st Defendant. 

(c) On the 16/3/1993, the 1 st Defendant - Oro Provincial Government filed a Notice of 
Intention to Defend. The defense was filed within 30 days of the date of service of 
the WS to 1 st Defendant. 

(d) On the 6/4/93, the 2 nd Defendant - the State filed a Defense stating that each every 
allegation in the Statement of Claim is denied because it was bad in law and disclosed 
no cause of action against the State. However, 1 st Defendant - Oro Provincial 
Government may sue and be sued by virtue of 



443- 



Section 12 of the Organic Law on the Provincial Government and Section 2 of Legal 
Proceedings By and Against the Provincial Government Act 1977. Further 2 nd 
Defendant states that the Statement of Claim alleges an agreement between Plaintiff 
and the 1 st Defendant for payment of services provided by the Plaintiff at the request 
of the 1 st Defendant. 

On the same date (6/4/93), the 2 nd Defendant - State filed a Notice of Motion to 
(1) remove itself as a party in the proceedings and (2) such further orders this Court 
deems fit. 

On the 7/5/1993, the Plaintiff filed a Notice of Motion seeking orders from the 
Court to (1) strike out NOID of the 1 st Defendant, (2) judgement in default of 
Defence be entered against the 1 st Defendant (3) Damages be assessed (4) 1 st 
Defendant pay Plaintiffs costs of the proceedings and (5) such further orders as this 
Court deems fit. 

On the 17/5/1993, Judgement was obtained in the National Court that (1) Notice 
Of Intention to Defend be struck out (2) Defendant is liable to the Plaintiff for 
damages (3) orders that damages be assessed (4) Defendant to pay the Plaintiff 
interests and costs. 

On the 13/8/1993, Plaintiff filed an Affidavit in Court stating a meeting that was 
held on the 18/6/1993 by parties representing the Plaintiff and the 1st Defendant to 
negotiate the quantum of damages plus ancillary matters following National Court's 
order for interlocutory judgement to be entered against the Defendant. The Plaintiff 
refers to a Notice Of Motion and Consent orders dated 9/8/1993 where parties have 
agreed but the Commission has so far not sighted any evidence in respect of notice 
of the meeting, signed minutes of the meeting, etc, confirming that the meeting took 
place and further parties in the meeting did agree to the assessed amount of 
Kl,320,384. (Requested to the Administration of Oro 



444- 



Provincial Government to provide records on this matter - COI Letter dtd: 
9/9/2008 signed by Nolan Kom - Technical Counsel) 

Events at Solicitor General's Office 

The office of the Solicitor General filed a motion in Court to withdraw its 
involvement on this matter as it claimed that it was not a party to the contract which 
was subsequendy breached resulting in this claim. 

Solicitor General's office only got involved to procure and process the assessed claim 
without any intention or appeal to provide advice to Oro Provincial Government to 
assess the liability and damages arising from the claim. 

The Solicitor General's office merely received letters from the Claimant's lawyers and 
gave clearance notices instructing Dept of Finance to settle the claim. 

The Solicitor General's office received and noted letters and correspondences from 
the various plaintiffs lawyers re: which lawyer's trust account should the payments be 
made to; how much is outstanding and to be paid; which parties on the Claimant's 
side were legitimate shareholders/ directors and other matters related to who has and 
does not have interest over the ownership and administration of the claimant's 
company (Orosambo Enterprise Limited), etc. 

Events at Attorney General's Office 

(a) There were no participation from the Attorney General's office on this matter as 
observed from records inspected at the National Court Registry and Solicitor 
General's offices, respectively. 



445- 



7. Settlement 



(a) From the proceedings under WS # 53/1993, the Setdement was done by 

way of a Judgement obtained in favour of Orosambo Enterprise Limited 
(Plaintiff) in the National Court on the 19/5/1993 after (1 st Defendant) Oro 
Provincial Government failed to file a Defense in the proceedings under 
"WS 53/1993. 

(b) In a letter dated 19/2/2003, The then Oro Provincial Administrator - Raphael 
Yibmaramba wrote to Secretary for Finance - Thaddeus Kambanei to assist the 
Provincial Government to settle the claim on its behalf raising concern Vbout the 
garnishee notice served on Oro Provincial Government's bank account and the effect 
this will have on its operations and the interest that continues to accrue at 8% p. a on 
the judgement amount without being settled. 

(c) In a letter dated 20/2/2003, NINAI Lawyers (Bonny Ninai) representing the 
Claimant, Orosambo Enterprise Limited wrote to Zaccharry Gelu (Solicitor General) 
officially advising him of the judgement obtained io favour of Orosambo Enterprise 
Limited against Oro Provincial Government to settie the claim. The letter further 
asked the Solicitor General to give its legal clearance to Finance Department to settle 
the claim. 

(d) In a letter dated 26/2/2003, The Solicitor General - Zacchary Gelu writes to 
Department of Finance Secretary — Thaddeus Kambanei giving instructions to settie 
the claim for the sum of Kl,968,751.20. The amount is inclusive of Judgement debt 
plus interest accrued over 10 years at a rate of 8% p. a. and legal costs. 



446- 



8, Pay-Outs by Department of Finance 



janofPiyateitls wait to Claimant-OrDJ«ttb«Enteirrise Limited 



17/W2D03 
30/5/2003 

wirmi 

2KM003 
31/18/2003 

vmwm 

unam 

23/8/2004 

imaxA 
imam 



straw 

912503 

924500 
933970 
943743 
945049 
969454 
987018 
994718 
13470 



Dm5i«» 

207 
207 
207 
207 
460 
2D7 
207 
207 
207 
207 



Function 

4201 
4201 
4201 
4201 
31 
4201 
4201 
4201 
4201 
4201 



AsMX 
2107 
2107 
2107 
2107 

4123 
2107 
2107 
2107 
2107 



iteM Esse 

135 Otosambo Enteipris 
135 Orosambo Enteipris 
135 Orosambo Entwpris 
135 Orosambo EnUipris 
Orosambo Enteipris 
135 Orosambo Enteipris 
135 Orosambo Enteipris 
135 Orosambo Enterpris 
135 Orosambo Enteipris 
135 Orosambo Enteipris 



Particular! »ff avmenf Type 

PaymntO/StandingDe CQ 

PaymentibrO/SC/Or CQ 

Pmto/sc/orderWSN CQ 

Pint tJs clot&tt WSW CQ 

0/SOOrderW.SHo. CQ 

Payment of O/SC/Ord CQ 

Pmto/sc/orderWS#5 CQ 

Court/Oid.WSNo_53of CQ 

Beingpmtfof olsd CQ 

Pmtforrepltcement CQ 



Ssmmary «fPaj»«>'ts w»*« *• Claimant's) Lawyer- AMNOL Lawyers 
17/3/2004 969832 207 4201 4123 135 Amnol&CompanyLa RepLchn,. 772204 

ty7Q004 989081 207 4201 2107 135 Amnolfe Company La Repl/chq#78221-due t 

Sraowttj »f Payments Mi* *> CWiiuhI's Lawyer - Saulep Lawyers 

16/H2006 1068525 207 4201 2107 135 Seulep Lawyers T/A O/SC/OrderFmt 

11/5/2006 1076943 207 4201 2107 135 Soulep Lawyers T/A 0/SC/Order(WS#:53/ 

1/6/2006 1078278 207 4201 2107 135 Soulep Lawyers T/A 0/5 Carder Pint 

22M/2006 108013S 207 4201 i 2107 135 Sautep Lawyers T/A 0/SC/0rdetPmt(W5. 



» ckeqees isnu4 to Orosambo Eni Lti then cancelled and reissued io AMNOL Lawyers 

Total Payments made 



CQ 
CQ 



CQ 
CQ 
CQ 

CQ 



Gal 

718078 
722445 
728495 
734195 
738362 
739730 
772204 
782212 
786699 
791767 



772427 
783458 



831259 
836477 
837740 
838904 



Source: PGASsystem -Left of Finance Casebook Report 



Less: Cancelled & re-issued cbqs 
Net Payments made 



44JO0.0O 
UXyjQODO 

80,000 DO 
100,000.00 

ioaooo.oo 

100,000.00 
5OCV0OO.0O 
350,000.00 
100,0)0.00 
46,384 JO 
1,520,384.00 

500.000.00 

350,000.00 

850,000.00 

400,000.00 
100,000.00 
200.000.00 
361,784.90 
lfl61.784.90 

3,432,168.90 

(850,000.00) 

I 2,582,168.90 | 



History of Payments 

■ A total of 16 instalment payments were made amounting to K3,432,168.90 (inclusive of 2 
lots of payments made and later alleged as cancelled worth K850,000) between years 
2003 and 2006. 

■ From these set of payments made:- 

A 10 lots of payments were made in the name of Orosambo Enterprise Limited 
amounting to 10,520,384 (including cancelled cheques totaling K850,000) 

p- 2 sets of payments made out under the name of AMNOL Lawyers for K850,000 
j 4 instalment payments paid in the name of SAULEP Lawyers for Kl,061,784.90 



447- 



■ 9/16 payments had some evidence provided which confirmed payments were made. From 
these 9/16 payments, the COI noted that documentation was not complete in each 
payment voucher details. 

Pay-out by Oro Provincial Government 

Per Correspondence dated: 19/2/2003 from the then Oro Provincial Administrator - Mr. 
Raphael Yibmaramba to Mr. Thaddeus Kambanei (Secretary DoF) - para 3: The Pronvintial 
Government paid K400, 000 in partial satisfaction of the debt. 

This payment is not showing on the WPA Cashbook records maintained by DoF. Issue: 

Double clipping! 

Action; Write to Oro Provincial Government to establish how much monies were paid to 
Orosambo Enterprise Limited and their lawyers out of the Provincial funds. 

Other Proceedings of connected or of relevance 

Other proceedings were filed under SCR # 45/1993:- 

(a) In about October 1993, PATO Lawyers filed SCR 45/1993 on behalf of Oro Provincial 
Government, seeking the Supreme Court's Review of the Judgement obtained in WS 
# 53/1993, in particular the amount of damages that was allegedly agreed to between 
Oro Provincial Government and Orosambo Enterprise Limited, 



448- 



(b) On the 8/10/1993, an interim restraining order was obtained to stay the enforcement 
of the Judgement that had been obtained by Orosambo Enterprise Limited with the 
alleged consent of Oro Provincial Government 

(c) On the 11/1/1994, the Supreme Court Review was discontinued and the restraining 
orders lapsed. 

Other proceedings were filed under WS # 420/1993:- 

(a) On the 20/10/1993, another WS # 420/1993 this time filed by PATO Lawyers 
acting for Oro Provincial Government seeking orders and declarations that consent 
orders made in WS # 53/1993 were invalid. PATO Lawyers contested that lawyers 
representing Orosambo Enterprise Limited under proceedings WS # 53/1993 made 
misrepresenting remarks and thereby induced Oro Provincial Government to 
consent to the judgement and orders made in relation to the claim. Further, PATO 
lawyers argued that:- 

i) the claim should have been deemed illegal and void as it did not obtain the 

approval of the Minister for Finance as required under Section 60 clause 1 
of the Public Finance (Management) Act 1986, and 

ii) the damages (ie, the judgement debt) claimed were fraudulendy calculated 

because the contractor did not perform the balance of the contract and that 
the contractor never discounted for overheads not incurred and taxes. 

(b) After fresh proceedings were filed under WS # 420/1993, Orosambo Enterprise 
Limited filed a Notice of Motion seeking orders that WS # 420/1993 be dismissed 
on the basis that it was an abuse of the Court 



449- 



process - should have been pleaded in defense to WS # 53/1993 which has been 
already dealt with. 

(c) Accordingly, the Chief Justice heard the Notice of Motion and made a Ruling on the 
22 nd July 1999 in favour of Orosambo Enterprise Limited to dismiss proceedings 
under WS# 420/1993. 

(d) There was no appeal filed against the ruling/ order. Minutes of the orders were taken 
out on 23 rd May 2000. 

Other proceedings were filed under OS # 1347/2001:- 

(a) Jack Orosambo, the surviving shareholder in Orosambo Enterprise Limited filed 

court proceedings under OS # 1347/2001 seeking declarations and orders to restrain 
other Orosambo parties from holding out and acting in their capacity as shareholders 
and directors of Orosambo Enterprise Limited. 

(b) The matter as of the date of 12 th August 2004 was still proceeding in court. 
Other proceedings were filed under OS # 357/2004:- 

(a) On the 12 th August 2004, Decision was made by GABI AJ, for the Court to hear two 
notices of motions filed by opposing parties under the proceedings OS#357/2004. 
Basically, Orosambo Enterprise Limited and Jack Bonard Orosambo were seeking 
declaration and orders that:- 

■ the estate of Late Godfrey Orosambo's be transferred to the Public Curator's office 
under Wills Probate and Administration Act 1996 and the Public Curators Act; 



-450 



■ the changes in the company's shareholding and directorship is fraudulent and 
illegal and in contrast to the relevant provisions of the Companies Act 1997; 

■ notice of change of lawyers filed by AMNOL Lawyers be struck out 

■ company forms completed and filed to effect changes in the company's 
shareholders and directors be of no effect and struck out 

■ order AMNOL Lawyers to refund monies of K850,000 to be repaid to the 
Court's trust a/c, 

■ restrain Department of Finance to make further payments to other parties 

■ all remaining funds due and payable to be paid into the National Court trust a/c 

■ AMNOL render to the courts a bill of taxable form for services rendered to the 
Plaintiff under WS # 53/1993 

■ AMNOL Lawyers to provide statement of funds held in trust 

■ further applied for restraining orders to restrain other persons claiming to be the 
lawful persons representing the interest of Orosambo Enterprise Limited. 

■ Leave to file a statement of claim for damages against the Defendants 

■ Cost of these proceedings 

On the other hand, the Other parties including AMNOL Lawyers argued that:- 

" The whole proceedings under OS # 357/2004 be dismissed as the Plaintiffs do not 
have any " locus-stand,V to institute and prosecute in these proceedings, the actions 
is misconceived and that it is an abuse of the process. 

■ Respondent pay the Applicants cost of these proceedings 

(b) Decision was reached by the GABI AJ, where the Court granted orders to 

declarations made by Plaintiff (Jack Orosambo) and its lawyers, SAULEP 



451- 



Lawyers. The Defendant's (ie, Other Orosambo parties and AMNOL Lawyers) cross- 
motion was dismissed. 

Recommended Findings 

■ Breach of relevant Sections of the Public Finances Management Act 

The Commission noted that this agreement (contract of service) valued at 
Kl,500,000 was never processed through the Central Supplies Tender Board or 
the Provincial Supply Tender Board as might be the procedure with tendering 
and awarding of contracts under Part VII - State Tenders and Contractors 
of the Public Finances (Management) Act 1986. It appears, that this 
contract was instead initiated direcdy by the then Oro Provincial Government 
and its administration with the contractor. 

y This contract does not appear to have been awarded through the Central 
' Supply Tenders Board nor the Provincial Supply Tender Board. 

In this instance, if the contract was initiated directly by the Provincial 
Government and its Administration of Oro Province at that time, then was this 
appropriate by the provisions of the relevant laws I acts such as the Public 
Finance Management Act 1986 and whether the financial delegated authorities 
and limits approved at that time were exercised correctly and not abused? 

In the view of the Commission, unless proven otherwise, the said contract 
should have been declared as VOID as the Oro Provincial Government, and its 
administration did not and still do not have the powers under the Public 
Finances (Management) Act 1986 to approve and award contracts without 
following the due process and procedures in consultation with the Minister for 
Finance and the relevant Supply and Tender Board, established in the same 
Act. 



452- 



" Breach of Section 47 A of the Public Finances Management Act 

Further, under Section 47 A: Offences (42) of the Public Finances (Management) Act 

1986, "Departmental Head\ Provincial Administrators, head of a public body or other officers who 
authorise orpermits a breach of procedures relating to the - Calling^ consideration and warding of tenders; or 
The execution of a state contract for the purposes of the Public Services (Management) Act 1986 or any 
contract entered into under that Act, are guilty of serious disciplinary offences 

It appears that then Oro Provincial Administrator (Mr Arthur Jawodimbari), Premier 
for Oro Provincial Government (Mr Dennis Kageni) or other officers including then 
Provincial Legal officer (Mr Tera Dawai) were not disciplined for being guilty of 
serious disciplinary offences in relation to breach of procedures. 

" Involvement of AMNOL Lawyers 

It appears that clause 13 concerning "Termination" of the contract only described that 
either parties may terminate the contract after 3 months of giving of notice to either 
party. There are no conditions binding on either parties stated that will arise in the vent 
the contract is terminated, no description of what consequences and liabilities binding on 
parties effecting the termination of the contract and loss suffered for termination of the 
said contract. 

The Commission is merely highlighting a fact that AMNOL Lawyers had full knowledge 
of the contract because they had constructed the details of the said contract on behalf of 
the State and then used their knowledge of this very contract they put together to sue the 
State. 



453- 



The question this Commission then asks is, have AMNOL Lawyers conspired 
with Orosambo Enterprise Limited and certain elements of the Oro Provincial 
Government to enter into this said contract and then later sue the State for 
breach of the contract? 

Further, was this contract initiated at the time when Oro Provincial 
Government were short of funds and with this knowledge proceeded to award 
the said contract with a view to force the State or its Agent to breach the 
contract for non-payment and suffer a claim against the State? 

No defence filed by Oro 'Provincial Government 

The Commission noted in an Affidavit dated 7/5/1993 {NCR Doc # 10) and 
filed by Paul Korerua of AMNOL Lawyers in the National Court requesting 
for a summary judgement to be entered into under Order 12 Rule 38 against 
Oro Provincial Government for defaulting in filing a Defence as required 
under Order 8 Rule 4. 

The question then is asked: Why did Oro Provincial Government file a NOID 
but did follow through to file a Defence within the allowable 90 days period 
and further did not seek any extension to file a Defence. 

Further, this Commission noted that a Defence was never filed at all. 

Assessment of damages claimed in the Judgement Amount 

Damages should be claimed for loss suffered (if any) due to non-payment of 
invoices for rendering of services in the period under the said contract subject to 
assessment by the Court , 



454- 



However, other considerations to take into account relate to whether or not the claims by 
the Plaintiff for services alleged to have been rendered were actually performed or not. In 
other words, did the Oro Provincial Government satisfy itself that work was actually 
done as claimed in the unpaid invoices received from the Plaintiff? 

Did the Oro Provincial Government Legal Officer or Lawyers from the Solicitor 
General's office see the opportunity to initiate a counter-claim if they had satisfied 
themselves that work may not have been done as claimed in the Plaintiffs invoices to the 
1 st Defendant? 

The Commission noted that "Judgement" dated 19/5/1993 {NCR -Doc # 11), 
order (3) stipulates that, "the damages be assessed'. 

The assessment of quantum according to an Affidavit Bled and dated 13/8/1993 
(NCR - Doc # 13) in the National Court of one Paul Korerua of AMNOL Lawyers as 
stated in his own words that, 

(4) meeting held to negotiate the quantum of damages plus ancillary matters following 
Judgement entered against Defendant. 

(5) terms agreed to by parties are contained in the Notice of Motion and Consent 
Orders dated 9/8/1993 and filed herein which have been signed by the parties. 

The Notice of Motion referred to in the Affidavit was filed by AMNOL Lawyers in the 
National Court dated 13/8/1993 and not on the 9/8/1993. 

That Notice of Motion assess damages at Kl,320,384 as judgement debt apart from costs 
and compound interest rates. 



455- 



The Order referred to in the Affidavit was filed entered on the 18/8/1993. The Order 
upholds the details of the NOM above in that damages be assessed at Kl ,320,384 as the 
judgement debt amount. 

It appears in the view of this Commission that there is no evidence (iej correspondences, 
signed minutes of the meeting, signatory of the Defendant approving of the assessment etc) 
was sighted on the files of the NCR and the SG reviewed to confirm that the Defendant did 
attend such a meeting and that in that meeting such quantum of assessment (ie, Kl,320,384) 
was agreed to pay for as damages. 

It appears that the quantum of value assessed for damages as judgement debt of Kl,320,384 
and costs of K10,000 were inserted in the NOM and Order by AMNOL Lawyers without 
any regard to reflect discount for overheads not incurred and taxation. 

According to WS # 420/1993, filed by PATO Lawyers acting for the Defendant (Oro 
Provincial Government) under WS # 53/1993; 

para (11), 

"The said contract was entered into by a common fundamental mistake of the parties in 
that both the Plaintiff and the Defendant erroneously believed that the damages sought 
in the Notice of Motion and ordered were damages actually suffered by the Defendant 
(Orosambo Enterprise Limited) whereas in truth and fact the damages agreed to had not 
been suffered by the Defendant (Orosambo Enterprise Limited)". 

para (18) 

"Further or in the alternative the Plaintiff says that the Defendant made the 
representations fraudulendy either knowing that the same were false, or recklessly and 
not caring whether they were true or false, in that: 



456- 



(a) the Defendant must have known that it had not incurred overheads for the balance of 
the contract period; but in spite of this it made a claim for damages which did not 
reflect any discount for overheads not incurred". 

Recovery ofMonies from AMNOL Lawyers 

A Notice of Motion (NCR Doc # 30) dated 9/7/2004 was filed in the National Court 
by Saulep Lawyers among other matters seeking orders from the Court to instruct 
AMNOL Lawyer to repay to the Court monies received from DoF on behalf of the 
Plaintiff. These monies paid to AMNOL Lawyers amount to K850,000 in 2 lots of 
cheques. (Verified to cashbook above in section 8). These monies were part payment of 
the setdement of the judgement debt ordered by the Courts to pay the Plaintiff. The 
monies were not paid to the Plaintiff. 



457- 



D. Employment with the State 

The Commission examined a number of claims for loss of entitlements arising from alleged breach 
of contract and loss of office. Of those the seven (7) matters listed below were fully investigated: 

1. Tau Liu (Provincial Administrator Southern Highlands); 

2. Tau Liu (Provincial Administrator Western Province); 

3. Isaac Lupari (Department head - Finance); 

4. Isaac Lupari (Department head - Defence); 

5. Isaac Lupari (Department head - DPM); 

6. Isaac Lupari (Department head - Transport & Civil Aviation); and 

7. Isidore Kaseng & 24 others (Members of Fly River Provincial Government). 

Out of the seven (7) listed matters six (6) were as Departmental head or Provincial Administrator 
employed under standard government contracts specified in section 28 of the Public Service Management 
Act (PSMA). The Public Service Commission advised the Commission that "Departmental heads are 
appointed, suspended and terminated under section 193(1A), 193(1B) and 193(1C) of the 
Constitution and the procedures are provided for under section 31 A, 31B, 31C, and 31D of the 
PSMA." In all six (6) matters, payments were made in excess of what was duly payable. 

The claimants in the matter of Isidore Kaseng & 24 others were members of the Fly River Provincial 
Government at the time when Provincial Governments were abolished by law. Their claims were for 
the loss of entidements which they alleged were due and owing for the period of suspension of the 
Fly River Provincial Government ('FRPG 5 ). Further, they claimed loss of entidements for the 
unexpired term of office following abolition of the FRPG. Both claims were heard and refused by 
the Supreme Court. 



458- 



Hie Public Services Commission advised the Commission that there are six (6) main 
ways in which employment contracts have been breached by Departmental heads 
terminating senior contract officers and the NEC terminating Departmental heads and 
provincial Administrators employment contracts: 

• Laying of disciplinary charges under section 52 of the PSMA instead of clause 25 

of the contract. 
» Prematurely terminating the contract 

• Departmental heads dismissing a contract officer without seeking and obtaining 
the approval of the Secretary of DPM as required under standard contract and 
Public Service General Order 9.24. 

• Failure of a Departmental head to conduct a contract renewal review before expiry 
of the contract as required under General Order 9. 

• Failure by Departmental head to determine disciplinary charges within 21 days of 

the date of reply received by officer — General Order 15.35 

• Dismissing contract officer in breach of the principles of natural justice. 

According to the PSC, the State has lost a substantial amount of money through 
unlawful/improper breaches of employment contracts. It lists a number of circumstances 
in which breach of contracts have occurred. Chief among them are: 

y Lack of or insufficient capacity of Departmental heads and Provincial 

Administrators to competently handle administrative and personnel matters. 
y Abuse of power. Done in order to replace officers with associates and for personal 

vendettas. 
y No consultation made with PSC for its mandatory recommendation under section 

193 (1Q, (ID) and Sections 31C & D, and section 60 C(c) of PSMA before 

suspension and or termination of contract is effected. 
y Abuse of process detailed under section 1(3) of the Public Service (Management) 

Criteria and Procedures for Suspension and Revocation of Appointment of 



459- 



Departmental Heads R e gulation 2003. and Clause 1 7 of the Standard Terms and Conditions 
of Employment. 

The Commission finds there is immediate need for co-ordination between Public Services 
Commission, Department of Personnel Management, Solicitor General, State Solicitor, Department 
of Finance & Departmental Heads (as to instructions, payments etc) to ensure: 

> compliance with Public Services Management Act 1995 & General Orders in administering 
employment contracts - lack of notice, failure to specify charges, failure to expedite 
hearings and determinations 

> Gross failure by Solicitor General to seek instructions from Department of Personnel 
Management ('DPM') and relevant departmental head 

> Gross failure by Solicitor General to seek instructions from DPM and relevant 
departmental head prior to signing deed of release 

y* Gross failure to apply terms of contract resulting in multiple or excessive payments 
i.e., unjust enrichment, particularly where the tenure of contracts overlap. 

In most matters investigated, the Commission found that there was extensive delay in the 
finalisation of applications for judicial review of decisions concerning suspension, termination and 
related employment matters. As a result, the State has been unnecessarily hampered in the effective 
administration and delivery of services. Apart from that, the affected officers' morale, commitment 
and performance have deteriorated to unacceptable levels despite being remunerated while on 
suspension. 

Immediate recommendations 

> Claims By and Against Act be amended to provide that on application by the 
Attorney General, an application for judicial review in respect of employment related 
matters shall be heard and determined within one (1) month after grant of leave. 



460- 



> Public Services (Management) Act 1995, related legislation, instruments and contracts of 
employment be amended to the following effect: o a serious disciplinary offence is 
committed where: 

iii. State line agency named as defendant fails to provide full and proper 

instructions to Solicitor General 
iv. State suffers loss as a result of negligence or failure to exercise due care in 

performance of duties 
v. Non-compliance with NEC Direction o On a finding of guilt shall - 

iii. be a ground for termination 

iv. render the person ineligible for appointment to any public office within 
next 10 years 



461- 



(a) Tau Liu - No. 1 

A. Does the matter fall within the Terms of Reference? 

1. The matter falls within the Terms of Reference of the Inquiry. The Contract of 

Employment between Tau Liu (Plaintiff) and the National Executive Council 
(NEC) had been signed on 26 October 1996. The Plaintiff filed the Court 
proceedings in 1 999 and the matter was eventually setded out-of- court by a Deed of 
Release dated 28 February 2003, pursuant to which a final payment was made in or 
about 2005. 

2. This matter may be covered under the following Terms of Reference: 5, 8, 9 and 12 

B. Source of Information and Documentation 

3. This brief comprises of facts and findings from the files and records of: 

• The Attorney-General's Office 

• The Solicitor-General's Office 

• The Department of Finance 

C. Background: Relevant Facts 

The Matter 

4. On 24 May 1999, the Plaintiff filed a claim against the State through the NEC for breach 

of his contract of employment (Contract) alleging that he had been unlawfully 
suspended and in effect, prematurely terminated from his position as the 
Administrator of the Southern Highlands Province. 



462- 



The Plaintiff claimed a total of K204,586.55 originally and later amended 
that to a sum of K227,l 47.79 being the balance of his contract of 
employment, and in addition sought interest and costs. 

On 28 February 2003, Zacchary Gelu, the Acting the Solicitor-General at 
the time, signed a Deed of Release with the Claimant, settling the claim at 
I<305,410.61. This amount includes K70,170.07, as interest @ 8% for a 
period of three (3) years. 

Payments by the Department of Finance. 

From the record of payments we have from the Finance Department, it is 
difficult to work out what payments were for the claim in this matter and 
what payments were for the claim WS 654/00, as the descriptions are not 
detailed enough. However as they are, they are records of payments to the 
Claimant. The record is as follows: 



Date 
















Cheque no 


Amount- K 


06/02/04 


962838 


460 


3100 








Pmt 0/s contract ent 


CQ 


768421 


300,000.00 


28/04/04 


977289 


221 


1501 


1101 


111 


Pmt for O/ standing C 


CQ 


776577 


111,054.60 


14/05/04 


980289 


207 


4201 


4123 


135 


Being pmt for of s co 


CQ 


778433 


100,000.00 


14/05/04 


980289 


207 


4201 


4123 


135 


Being pmt for o/s co 


CQ 


778433 


168,305.89 


30/06/04 


988448 


207 


4201 


4123 


135 


Pmt o/s DOR WS#654 


CQ 


782652 


200,000.00 


09/12/04 


11100 


207 


4201 


2107 


135 


P/pmt for O/S contra 


CQ 


797364 


83,716.50 


03/06/05 


1035007 


207 


4201 


2107 


135 


Final payment-Deed o 


CQ 


812534 


90,000.00 


















TOTAL 


1,053,076.99 



In addition to the payments set out above, Claimant has also received from the State 
an Ex gratia payment of K30,000.00 in this matter. This was paid on 30/03/00 by 
cheque # 614181. The payment was made as compensation payment, on the 
direction by the NEC in its meeting No. 06/2000, after it 

463- 



rescinded its earlier decision, Decision No. 112/99, to appoint the Claimant as the 
Administrator of Western Province. 

The Claimant has given evidence that the payment of Kill, 054.60 was not part of his 
claims referred to herein but rather his long service entidements to the State whilst he 
was the Commissioner to the Public Service Commission. The Commission has 
confirmed this. 

Further the Claimant has also given evidence that he has not received the sum of 
K168, 305.89, which is shown on the Finance records. Numerous attempts to get the 
Department to verify this has not been successful. 

In light of that, it can be seen that the Claimant has only received a total of K773, 
716.50 and not what is shown in the records given by the Department 

Chronology 

8. On 26 October 1996, the Plaintiff was appointed Administrator of Southern Highlands 

Province. He signed a Contract of Employment tided The Contract of Employment for the 
Administrator of the Southern Highlands Provincial Government (Contract), with the NEC, for 
a term of four (4) years. The Contract comprised: 

(a) the Employment Agreement and 

(b) the Standard Terms and Conditions for the Employment of Provincial 
Administrators in the National Public Service (1995) {Terms <& Conditions) 

9. The Plaintiff served in that position until he was suspended by the Governor, Anderson 

Agiru on 7 August 1997. It appears from the pleadings that the Plaintiff had initially 
been suspended on full pay. However, on 6 January 



464- 



1998, the State had proceeded to remove him from the payroll, effectively 
suspending him without pay. The Plaintiff was never terminated. 

10. By a letter dated 3 May 1999, the Plaintiff, through his lawyers Paul Paraka 
Lawyers, gave notice of his intention to bring a claim against the State, in 
accordance with section 5 of the Claims Bj<<& 'Against the State Act 1996. The 
State received the purported notice on 5 May 1 999, and acknowledged receipt 
of the said notice by a letter dated 10 June 1999, which also enclosed the 
State's Notice of Intention to Defend. The State did not take issue with the 
timing or adequacy of the notice. 

1 1 . Thereafter, on 24 May 1 999, the Plaintiff filed proceedings WS No. 501 of 

1999. In his Statement of Claim, he alleged that: 

(i) he had been suspended on 7 August 1997 and 

(ii) removed from the payroll on 6 January 1998 and 

(iii) his suspension was arbitrary and unjustified and amounted to a 

breach of various clauses in the Contract, including, the NEC's 
failure to charge him and accord him a fair hearing. 

12. Further, in his prayer for relief the Plaintiff claimed damages in the amount 
of K227,l 47.79, allegedly, being the value of the balance of the Contract, 
which had one (1) year nine (9) months and twenty-one (21) days remaining 
at the time of his suspension. On 25 May 1 999, the Plaintiff served the Writ 
of Summons on the State through the Solicitor-General's office. 

13. On 9 June 1999, the State (through the Solicitor-General) filed a Notice of 
Intention to Defend and following that, a Defence on 4 August 1999. 



465- 



List of Documents 





DATE 


DOCUMENT 


COMMENTS — 


1 


26 October 1995 


Contract of Employment for the 


The Contract of Employment comprises 






Administrator of Southern 


of: The Employment Agreement and The 






Highlands Provincial 


1995 Terms & Conditions. 






Government - Mr. Tau Liu 




2 


3 May 1999 


Letter from Paul Paraka Lawyers 
to the Solicitor- General in 
compliance with the CBAS Act. 


The letter does not specify any dates 


3 


24 May 1999 


Writ of Summons filed by Pair! 


Claiming the sum of K204,586.55 - 






Paraka Lawyers 


essentially the balance of his Contract 
which still had 1 year 9 months and 21 days 
left. The Writ on the Solicitor-General's file 
is stamped as received on 25 May 1999. 


4 


9 June 1999 


Notice of Intention to Defend 
filed by the Acting Solicitor- 
General on behalf of the State. 





10 June 1999 



Letter from the Acting Solicitor 
General to the Secretary, 
Department of 



Advising of the Plaintiffs claim and seeking 
instructions as to whether the Plaintiff had 
definitely been 



466- 







Personnel Management 


suspended and/or terminated. 


6 


10 June 1999 


Letter from the Acting 


Acknowledging receipt of s. 5 notice 






Solicitor-General to Paul 


and enclosing by way of service, the 






Paraka Lawyers 


State's Notice of Intention to 
Defend. 


7 


4 August 1999 


Defence filed by the 


Basically, the Defence adequately 






Solicitor-General's office. 


condescends to the allegations in 
the Statement of Claim and states 
relevantly that: 

The Plaintiff had been suspended 
with full pay, for a disciplinary 
offence (not specified) which 
required an investigation to be 
conducted, and he had been given 
prior notice of his impending 

suspension, 

A The Plaintiff had absconded 

from work and therefore was 
removed from the payroll 
terms of suspension were not 
clearly set out, 

That there had not been any 
decision as to the Plaintiffs 
termination and 

4* The National Court had 
refused the Plaintiffs 
application for declarations that 
he had been unlawfully 
terminated, in another 



467- 



proceeding - OS NO. 503 A f 1998 -for the 
reason that DPM had yet to receive the 
Plaintiffs response to the charge and make 
a decision as to whether he should be 
terminated. 

In effect, the State's position in respect of 
the Plaintiffs claim was that the proceedings 
were premature and/or misconceived. 



30 July 1999 



Letter from the Attorney 
General to the Acting Secretary^ 
DPM 



Referring to a letter written by the Plaintiff 
o the Acting Secretary DPM in respect of 
his indefinite suspension from office. The 
letter, also copied to the Plaintiff, contains 
the Attorney-General's (Michael Gene) 
opinion and a recommendation for a way 
forward in the matter. 



24 August 1999 Letter from the Attorney- 
General to Philemon Embel, 
Minister for Public Service. 



The letter (also copied to the Plaintiff) 
provides a further opinion on the matter of 
the Plaintiffs suspension — this time, with 
the benefit of further material — and 
expresses a view that the Plaintiff be 
reinstated with back pay and the 
disciplinary process be re-enacted. 



468- 



10 



4 October 1999 Notice of Amendments (to the 
Writ) filed by Paul Lawyers. 



11 



4 October 1999 



Writ of Summons (as amendedfThe 
pursuant to Order 8 rule 51 of theother 
National Court Rules) filed by Paul|considerati 
Paraka Lawyers 



amendments seek to include various 
heads of claims, i.e. for CPI 
ons, security allowance and 
Domestic Market Allowance, and an 
amendment to ' the total sum claimed from 
K204.586.55 to K227,147.79. 



12 



7 October 1999 



Letter from the Plaintiff to PaullEnclosin 
Lawyers 



g a copy of the Attorney- 
General's further advice to DPM and 
emphasizing his view that the State had 
indeed conceded fault /liability in dealing 
with the issue of his suspension. 



13 



18 October 1999 Letter from Paul Paraka LawyerslThe 
to the Acting Solicitor-General 



Plaintiffs lawyers refer to the opinion 
of the Attorney-General and seek the 
State's view as to an out-of-court 
settlement in light of the Attorney- 
General's opinion. 



14 



6 December 1999 Letter from Paul Paraka Lawyers 
to the Acting Solicitor-General 



Following up on the initial proposal for 
out-of-court settlement. 



15 



24 January 2000 



Letter from Paul Paraka Lawyers 
to the Acting 



Further urging the State to settle the matter 

out-of-court. 

469- 







Solicitor-General 




16 


7 February 2000 


Letter from the Acting Solicitor- 


The letter refers to the Attorney^ General's 






General to Paul Paraka Lawyers 


opinion and a subsequent letter from the 
Plaintiffs lawyers, and insists that the State 
will continue to defend the Plaintiffs claim. 


17 


23 March 2000 


Letter from Paul Paraka Lawyers 


Enclosing Notice to Set Down for Trial for 






to the Acting Solicitor-General 


endorsement by the I Solicitor-General 


18 


4 April 2000 


Letter from the Acting Solicitor- 


Referring to the Notice to Set Down for 






General to Paul Paraka Lawyers 


Trial and advising of instructions being 
sought from DPM with a view to settling 
the matter. 


19 


10 August 2000 


Notice of Motion filed by Paul 


Seeking orders to list the matter on the 






Paraka Lawyers 


Call-over list for allocation of a trial date. 


20 


10 August 2000 


Affidavit of Andrew Kongri 


The Affidavit deposes to the fact that the 






filed by Paul Paraka Lawyers 


matter had been ready for trial for a while, 
awaiting the Solicitor-General's 
endorsement of the Notice to Set Down 
for Trial, being the reason for the 
application. 


21 


26 September 


Letter from Paul Paraka 


Setting out the Plaintiffs quantum 



470- 





2002 


Lawyers to Zacchary Gelu — 


submission and proposing setdement at 






Solicitor-General 


K313,194.84. 


22 


28 February 2003 


Deed of Release prepared by The Deed was for the full amount claimed 






Paul Paraka Lawyers 


by the Plaintiff in his Writ and signed by 
Zacchary Gelu as the Solicitor-General. 


23 


4 September 2003 


Letter from the Plaintiff to theRequesting the Attorney-General to 






Attorney-General 


authorize payment of the Plaintiffs 2 
claims — this and the other claim in WS 
NO. 654 of 2000. 


24 




Finance Department Cash Book 
Record and Payment 
Advice/ Vouchers 





D. Findings 



Claim - Liability and Quantum 

14. In its defence the State raised the argument that a notice of suspension had 
been sent to the Plaintiffs last known address at care of the Enga Provincial 
Administration Office in Wabag, and that the Defendant could not make a 
decision to terminate the Plaintiff as he was yet to respond to the 
disciplinary charge, as required under the Contract. 

15. Notwithstanding that the State had filed a Defence within the required time 
period, raising valid points for contention that effectively warranted a full 
trial, there appears to have been a sudden shift of attitude by the state 
lawyers from actively defending the claim to considering an out-of-court 
settlement. 



471- 



(a) Arguable cause of action in law 

The Contract 

15.1. The Contract was made pursuant to the Public Services (Management) Act 
1995 (Act,) and comprised of- 

• The Employment Agreement dated 26 October 1995 (Agreement) and 

• Standard Terms and Conditions for the Employment of Provincial 

Administrators in the National Public Service (1995) ( Terms & 
Conditions) 

15.2 In both the Agreement and the Terms & Conditions, it was provided that 

the General Orders issued under the Act would prevail where the 
Contract, comprising both documents, is silent and in the event of a 
conflict of interpretation as between the Contract and the General Orders, 
the Contract would prevail. 

Termination 

15.3 The Terms and Conditions provides for termination as follows: 

(a) By the Administrator giving to the Governor at least three (3) 
calendar months' notice, or 

(b) By the NEC terminating the Administrator's appointment in 
accordance with Clause 17.1 (a), (b), (c), (e) or (f), in which event 
the Administrator 

will be entitled to payment in respect of three (3) calendar 



. 472 



months' notice, together with other emoluments calculated 

up to the expiration of the notice period, including ex gratia 

payments under section 12 where applicable, or 

(c) By the NEC terminating the Administrator's 

appointment under Clause 17.1(d) - for Cause as 
determined by the Terms & Conditions and (g) -for any 
breach of the Contract. In the event where the Contract 
is terminated by the NEC for cause or for breach, the 
Administrator will not be entitled to any payment in lieu 
of notice under the Contract. 



Suspension and Termination for Cause A.. 
Suspension 

15.4 The Contract Clause 27 sets out the procedure for disciplinary action 
against the Administrator in the event of serious disciplinary matters 
set out under Clause 18.1 (a) to (j) inclusive. Clause 27.1(a) provides 
for the suspension of the Administrator by the Governor, if he is 
alleged to have committed a serious offence under clause 18. The 
Administrator is then required to reply to the charge(s) within seven 
(7) days of the charges being laid. Thereafter, the Governor is required 
to consult with the DPM Secretary before making a recommendation 
for termination to NEC. The NEC decides whether the 
Administrator's appointment should be terminated, and the decision 
of the NEC is final. In reaching its decision, the NEC must be guided 
by advice from the State Solicitor and the Secretary DPM, as well as 
the Governor's report. 



473- 



B. Termination 

15.5 Clause 12 of the Terms & Conditions provides for termination for 
reasons other than cause, and Clause 18 provides for termination for 
cause. 

15.6 Clause 18.2 prescribes termination without notice where the 
Administrator is found guilty of any of the charges set out under Clause 18. 
According to the documentation on the Solicitor- General's file, the Plaintiff 
was suspended for cause, and therefore, by operation of Clause 17.2(c), was 
not entitled to any payment in lieu of notice under the Contract. 

16. Be that as it may, it must be noted at this juncture that the Plaintiff had only been 
suspended and his termination yet to be determined, when he filed these proceedings. 
The National Court had previously refused to entertain a similar proceeding he had 
filed in 1998 seeking declarations that he had been unlawfully terminated, on the 
ground that the Department of Personnel Management had yet to receive his reply to 
the disciplinary charge that he had been issued. 

Wrong form of Action 

17. It appears therefore, that on the face of it the Plaintiff had instituted the wrong form 
of action. It is considered that the appropriate cause of action should have been a 
judicial review proceeding seeking a writ for mandamus compelling the State to 
properly deal with his offence in accordance with set disciplinary procedure, and/or a 
final determination of his employment by termination. 



Assessment of Damages - Quantum 

474- 



18. In view of the above, the issue of damages should not have been considered given 
that the State had filed a Defence denying liability outright. The Plaintiff would not 
have been entitled to any relief under the Contract, as the Terms and Conditions 
Clause... prohibits payment of money in lieu of notice where the employee is 
terminated for cause. 

19. Under the common law and the Employment Act, even where a person is terminated in 
breach of their contract of employment the most they may be entided to would be 
money in lieu of notice. Further, it has been the Court's approach of late that, a claim 
for the balance of a contract of employment or in effect, penalty clauses are 
unenforceable. 

20. Furthermore, in this case, Clause 17.2(c) of the Terms & Conditions specifically 
precludes payment in lieu of notice or other emoluments under the Contract, in the event that the 
employee is terminated for cause. It is therefore considered that the Plaintiffs claim 
for the balance of the Contract and the State's entertainment of such a claim in the 
circumstances was in direct contravention of the Terms & Conditions of the 
Contract. 

Attorney-General & Solicitor-General 

21. Under the cover of a letter dated 30 July 1999, the Attorney-General had provided 
advice to the Acting Secretary, Department of Personnel Management, in respect of 
the Plaintiffs claim, essentially recommending that the State lift the Plaintiffs 
suspension and reinstate him with full back pay to avoid payment of a large sum of 
money by way of compensation, or, the disciplinary process under Clause 27 of the 
Terms & Conditions be fully complied with and the Plaintiff properly terminated. 



475- 



22. Thereafter, in a letter dated 24 August 1999, the Attorney-General provided 
advice to Philemon Embel, Minister for Public Service expressing the 
following view: 
24 August 1999 

Hon. Philemon Embel, TLB; MP; 
Minister for Public Service 
PO Box 519 
WAIGANI 

National Capital District. 

My dear Minister 

SUBJECT: MR. TAU LIU - SOUTHERN HIGHLANDS 
PROVINCIAL ADMINISTRATOR (IN SUSPENSION) 

I refer to jour letter of 18 August 1999 in respect of the above matter in which you sought 
further advice. 

Thank you for ■ providing me documents and information to which I was not privy to when 
Ifirst sent you my advice of 3 ff' July 1999. 

I have perused the additional documents you forwarded and maintain that this matter 
should be dealt with by NEC once andfor all. 

This will help alleviate problems faced by parties to the problem and above all the people of 
Southern Highlands who are in need of administrative leadership when the Province is 
faced with massive project development such as the gas project and the law and order 
situation. Hence, I reiterate my earlier view that the suspension was only a temporary 
measure to allow for investigations so as to ultimately enable the National Executive 
Council to decide on whether or not to terminate Mr Tiu's services. Since the procedure 
enumerated under Clause 27 of the Contract of Employment has not been thoroughly 
complied with and completed, I consider it proper that this be done. 



476- 



I take note of jour acting Secretary's brief to you dated 4 th August 1999 in which he presents the 
Department of Personnel 'Management 's Position on the matter. In my view your Department's view is 
that the process of dealing with Mr. Uu be continued from where it was left. On the status of the case, I 
am sure that my Department will do its outmost to defend the interest of the State. However, no case can 
be finalised without incurring any form of costs to the parties. In this case the state will be made to pay 
damages and costs because the facts on the substantial issue tend to be in Mr. Uu's favour. 

It is apparent .that Mr. Uu was not and has not been dealt with properly and the fact that he has been in 
suspension for this long In my view is unreasonable. The State may not win the pending case despite our 
efforts to defend only on one ground that Mr. Uu failed to respond to the charges. There are other 
substantive issues that would arise. Issues such as the long time it has taken the State to deal with him, 
failing to serve process effectively, failing to resolve the issue in compliance with the terms of the Employment 
Contract and the length of time that has taken the Department to take the matter for NEC's deliberation 
within reasonable time etc. In these circumstances, it is not unreasonable to expect that the State will be 
held responsible for improper action or inaction. The State must be protected against paying large sums of 
money for something that ought to have been settled promptly through administrative process. Let alone the 
embarrassment that your Department may be faced with. 

I would maintain that unless the State has properly charged and substantiate the charges by due process, it 
is in the interest of the State to have the suspension lifted by Cabinet and have him serve his full term. If he 
is terminated, his termination was so done without properly dealing with the charges under clause 27 of the 
Contract of Employment. It is your prerogative to recommend to cabinet the best cause of action taking into 
accounts the law and the interest of the State. 

Under the circumstances, try view is that it would have been cheaper to reinstate Mr. Liu with backpay 
and reenact the disciplinary procedures to take place. Taking the course 



477- 



outlined in jour Acting Secretary's Brief in my view may be expensive and counterproductive. 

I trust the interest of all parties will be taken into account when deciding on whether or not Mr. Uu is 
reinstated. 

Please contact me directly should you have further queries on the matter. 

Yours sincerely, [. ^g 11 * ] 

MICHAEL M. GENE Secretary & Attorney General Cc: Hon. Kilroy Genia, 

MP 

Minister for Justice 

Cc: Mr. John Kali 

A/ Secretary, Department of Personnel Management Cc: Mr. 

Tau Eiu, Administrator (in suspension) Cc: Mr. Fred Porno, 
State Solicitor 

MMG:bm 

23. Initially, die Plaintiff had used his copy of the Attorney-General's advice in an attempt to 
negotiate the settlement of his claim. However, in a letter from the Acting Sol icitor- 
General to the Plaintiffs lawyers dated 7 February 2000 Hitelai Polume-Kiele replied 
describing the Attorney-General's letter to the Secretary, Department of Per; onnel 
Management, as purely an expression of his [Attorney-General's] opinion, and as such, 
not binding on the State.. Tn addition, the Solicitor-General advised the. Pl aintiff 



through his lawyers, that the State had filed a Defence and that the matter should be 
progressed to trial. 



478- 



In the circumstances, it is considered that the actions of the Attorney- General in his 
advice to the Minister for Public Service appear to defy the principle duty of a lawyer 
to his client - in this case, the Attorney-General to the State - in terms of protecting 
the client's interest; for the following reasons: 

(i) the advice favors the Plaintiffs case when indeed the facts support a valid 

Defence with good prospects of success given that the State's disciplinary 
procedure had been primarily frustrated by the Plaintiffs inaction in failing to 
reply to the charges, as required under the Terms & Conditions. It must be 
noted at this juncture that the Plaintiffs disciplinary charge had something to 
do with the Plaintiffs abscondment from duties, and 

(ii) the Attorney-General had acted improperly in his duty as the principal legal 
advisor to the State by copying the Plaintiff in on his advice to the Minister 
thereby compromising the State's position with regards to pursuing its 
Defence. 

Notwithstanding the above, it appears however, that the state had eventually agreed 
to settle the Plaintiffs claim on the basis of the Attorney-General's advice or opinion. 
The actions of the Attorney-General are covered under Term of Reference 12 of the 
Inquiry 7 . 

Further and in the alternative, it is considered that in his advice, the Attorney-General 
should have appropriately addressed the issue of quantum. In this case, the Solicitor- 
General had signed the Deed of Release agreeing to settle the hall amount of the 
Plaintiffs claim, and it further appears that the Plaintiff may have collected more than 
the amount settled at from the Department of Finance. 



479- 



Compliance Issues 

(a) Public Finance (Management) Act 1995 

28. There is no clearance letter from the Attorney-General or the Solicitor- General to 
authorize payments to the Plaintiff, which letter is a prerequisite to 
settlement/payment of any judgment debts, etc (refer to Yer's evidence.) 

(b) Claims By & Against the State Act 1996 

29. By a letter dated 3 May 1999, the Plaintiff, through his lawyers Paul Paraka Lawyers, 
gave notice of his intention to bring a claim against the State, in accordance with 
section 5 of the Claims By <& Against the State Act 1996- 

• The State received the purported notice on 5 May 1999, and notwithstanding 
that the notice had been insufficient and given outside of the prescribed six (6) 
months period, the State acknowledged receipt of the said notice by a letter 
dated 10 June 1999, which also enclosed the State's Notice of Intention to 
Defend. Accordingly, there does not appear to be any issue with the 
requirements in respect of notice under section 5 of the CBAS Act 1996. 

• The letter comprising the notice omitted to state the date of the alleged breach, 

• The notice was given outside of the six (6) months time period as required under 

the Claims By & Against the State Act 1 996, 

• However, the State did not take issue with the timing of the notice. 

30. Further, in his Statement of Claim the Plaintiff had omitted to plead that he had given 
section 5 notice. 



480- 



(c) Frauds <& limitations Act 1988 

31. The Plaintiff had brought his claim within six (6) years as required under 
section 16 of the Frauds <<& limitations Act 1988, hence 

there is no issue in this respect. 

(d) Attorney-General Act 1989 

32. It is obvious from the facts, with supporting documentation in this matter, 
that, both the Attorney General and the Solicitor General in exercising their 
functions, duties, and responsibilities as set out in the Attorney General Act 
1989 have not done so in the best interest of the State. 

The Attorney General is the Principal Legal Adviser to the National 
Executive Council (section 3) and his functions, duties and responsibilities 
are set out in sections 7, 8,10,13,15 and 16 of the Act. 
Essentially, by virtue of these functions, duties and responsibilities, the 
Attorney General must exercise those in the best interest of the State. 
Otherwise, he will be in breach, as it is in this case, where the Attorney 
General, then, Mr. Gene, in his letter of 30 th July 1 999 to the Minister for 
Public Service, compromised the State's position by copying his letter to the 
Claimant, Mr. Liu, who used that to his benefit. Such action is definitely 
not in the best interest of the State. 

The Solicitor General on the other hand has one main role and that is set 
out in Section 13 of the. Act. Section 13(1) states that, the Primary function of 
the Solicitor General is to appear as an advocate for the State in matters coming before the 
courts in Papua New Guinea, and in exercising that role, the Solicitor General 
must do so, on instructions from the Attorney General only(section 13(2)). 

In this claim by Tau Liu, a defence, was filed on 04/08/99 by the State 
through Mrs. Hitelai Polume Kiele, the Solicitor General at the time, the 



481- 



Claimant filed his proceedings in the best interest of the State, but despite that, Mr. 
Gelu, who took over from Mrs. Kiele, as the Solicitor General, for reasons not known 
and without any instructions from the Attorney General, entered into a Deed of 
Release on 28/02/03,effectively making the State liable to the claim by the Mr. Liu. 
Like the Attorney General, the action by the Solicitor General was definitely not in the 
best interest of the State. 

(e) NEC Decisions 

33. The Deed of Release was made on 28 February 2003 at which time NEC Decision 
NG 07/2002 (Decision) was in place. Clauses 10 and 12 of the Decision: 

(i) Clause 10 - directed that there be no more out of court setdements by any 

State body or authority, including the Attorney-General and the Solicitor- 
General, without the approval of the NEC, acting on advice from the CACC 
and 

(ii) Clause 12 — directed that no public officials, including Ministers and heads of 
departments and public bodies, are to commit the State to any new contractual 
obligations through agreements beyond the approved amounts in the 2002 
supplementary budget. 

34. From the Solicitor-General's records, there does not appear to be any approval sought 
or obtained from the NEC nor any advice from the CACC to legitimize the Deed of 
Release by which the Plaintiffs claim was finally settled. Accordingly, it is arguable that 
the Deed of Release was improper. 

E. Recommendations 



482- 



1. Out of Court Settlements 

This was a claim which the State had a valid defence and it was filed in court within 
time, but for no valid reasons, Mr. Gelu who was the SG then, decided to setde the 
claim that was defendable. 

In light of such conduct Mr. Gelu should never be allowed to hold a high position as 
that of SG ever again. His conduct clearly showed that he was not there to protect 
the interest of the State but perhaps for his own gain. This-is clearly negligence on 
the part of Mr. Gelu. 

Therefore to prevent further settlement to the detriment of the State, it is 
recommended that any State matter that has a defence and which has been filed, no 
one representing the State should settle the claim unless approval of the 
Departmental Head of the concerned Department is given after proper advice on the 
claim was considered. 

In the absence of the approval, no settlement should take place. 

2. Inclusion of Interest in setdement of Court 

It has been noted in this matter and many others setded out of Court that, interest is 
always included. Whether this is right or not, is something to be cleared and perhaps 
that could be clarified by amendments to the Judicial Proceedings (Interests on Debts ana 
Damages) Act and the National Court Rules. In the meantime, it should be left to the 
Courts to be the only Authority to order interest, unless it is payable as of right under 
Agreement as stated in the Judicial Proceedings (Interests on Debts and Damages) Act. 



483- 



(b) Tau Liu-No. 2 

A. Does the matter fall within the Terms of Reference 

1 . The matter falls within the Terms of Reference of the Inquiry. Tau Liu 
(Plaintiff) claims that the National Executive Council (NEC) appointed 
him Administrator of Western Province on 25 November 1999. The 
Plaintiff filed Court proceedings in 2000 and the matter was eventually 
setded out-of-court by a Deed of Release dated 28 February 2003, pursuant 
to which a final payment was made on 03 June 2005. 

2. This matter may be covered under the following Terms of Reference: 2, 5, 
8, 9 and 12. 

B. Source of Information and Documentation 

3. This brief comprises of facts and findings from the files and records of: 

• The Attorney-General's Office 

• The Solicitor-General's Office 

• The D epartment o f Finance 

C. Background: Relevant Facts 

The Matter 

4. The Plaintiff sued the State in proceedings WS No. 654 of 2000 for breach 
of an alleged contract of employment. He claimed that the NEC had 
appointed him Provincial Administrator of Western Province, and 
thereafter, recalled him and revoked his appointment without justification. 



484- 



5. The Plaintiffs claim against the State was partly settled by way of a default 
judgment in respect of liability - the State had defaulted in filing its Notice 
of Intention to Defend and Defence. Thereafter on 28 February 2003, a 
Deed of Release was negotiated by the Plaintiffs lawyers, Paul Paraka 
Lawyers, and signed by the Plaintiff and the then Solicitor-General, 
Zacchary Gelu. 

6. The _ Plaintiffs claim was settled in the entire amount claimed in the 
Statement of Claim as well as interest at the yearly rate of 8% for a period of 
two (2) years. 

Payments by the Department of Finance. 



From the record of payments we have from the Finance Department, it is 
difficult to work out what payments were for this claim and what payments 
were for WS 501/99, as the descriptions are not detailed enough. However 
as they are, they are records of payments to the Claimant. The record is as 
follows: 



Date 
















Cheque no 


Amount -K 


06/02/04 


962838 


460 


3100 








Pmt 0/s contract ent • 


CQ 


768421 


300,000.00 


28/04/04 


977289 


221 


1501 


1101 


111 


Pmt for O/ standing C 


CQ 


776577 


111,054.60 


14/05/04 


980289 


207 


4201 


4123 


135 


Being pmt for o/s co 


CQ 


778433 


100,000.00 


14/05/04 


980289 


207 


4201 


4123 


135 


Being pmt for o/s co 


CQ 


778433 


168,305.89 


30/06/04 


988448 


207 


4201 


4123 


135 


Pmt o/s DOR WS#654 


CQ 


782652 


200,000.00 


09/12/04 


11100 


207 


4201 


2107 


135 


P/pmt for O/S contra 


CQ 


797364 


83,716.50 


03/06/05 


1035007 


207 


4201 


2107 


135 


Final payment-Deed 


CQ 


812534 


90,000.00 


















TOTAL 


1,053,076.99 



In addition to the payments set out above, Claimant has also received from the State 
an Ex gratia payment of K30,000.00 in this matter. This was paid on 30/03/00 by 
cheque # 614181. The payment was made as compensation payment, on the 
direction by the NEC in its meeting No. 06/2000, after it 

485- 



rescinded its earlier decision, Decision No. 112/99, to appoint the Claimant as the 
Administrator of Western Province. 

The Claimant has given evidence that the payment of Kill, 054.60 was not part of his 
claims referred to herein but rather his long service entidements to the State whilst he 
was the Commissioner to the Public Service Commission. The Commission has 
confirmed this. 

Further the Claimant has also given evidence that he has not received the sum of 
K168, 305.89, which is shown on the Finance records. Numerous attempts to get the 
Department to verify this has not been successful. 

In light of that, it can be seen that the Claimant has only received a total of K773, 
716.50 and not what is shown in the records given by the Department 

Chronology 

8. The Plaintiff claims that on 25 November 1999, the National Executive Council 
(NEC) appointed him Provincial Administrator of Western Province for a period of 
four (4) years (Appointment) The Appointment took place during the NEC Meeting 
No. NG 22/99 and by NEC Decision No. NG 112/99 (Decision) The Decision also 
included a directive to Bill Kua, the Secretary responsible for the Department of 
Personnel Management (DPM) to prepare a Contract of Employment for the 
Plaintiff to sign. 

9. On 30 November 1999, the DPM Secretary wrote to the Plaintiff advising him of the 
Appointment and that a Contract was being prepared for his execution. In addition, 
the DPM Secretary instructed the Plaintiff to contact Wesley Malaisa, the Acting 
Administrator of Western Province and advise him of his travel plans. He also advised 
that the Western Provincial 



486- 



Administration had been authorized to pay the Plaintiffs normal salaries. The 
Secretary also expressed his willingness to accompany the Plaintiff to Western 
Province to assist him in settling in and to ensure a smooth transition. 

10. On 8 December 1999, the Plaintiff commenced work as the Western Provincial 
Administrator, on the expectation that his Contract was being prepared for execution 
in due course. However, on 25 December 1999, Robert Igara, the Chief Secretary to 
the Government at the time, instructed the Plaintiff to stop performance of all 
responsibilities and functions of the Administrator, return to Port Moresby and 
report to the Minister for Public Service (Philemon Embel) for redeployment. 

In its Meeting No. 06/2000 the NEC directed the Secretary responsible for the Department of 
Finance & Treasury - Decision No. 26/2000 dated 1 March 2001 — to "immediately 
appropriate an ex gratia payment of ¥30, 000.00 to the Department of Prime Minister and National 
Executive Council to pay Tau Tiu, by way of compensation as three (3) months payment on a 
"quantum merif basis... " 

1 1 . Accordingly on 30 March 2000, the Plaintiff was paid an ex gratia payment of 
K30,000.00, by way of compensation as three (3) months payment assessed on a 
quantum merit basis. 

12. On 12 June 2000, the Plaintiff filed proceedings WS NO. 654 of 2000 against the 
State as sole defendant, claiming damages for breach of the employment contract he 
alleged to have reasonably expected to execute as a result of the representation from 
the PPM Secretary in his letter of 30 November 1999 . In his Statement of Claim the 
Plaintiff pleaded a liquidated claim for the sum of K388, 517.12, which the Plaintiff 
had assessed in accordance with the entitlements of a Provincial Administrator 
prescribed in the Standard Terms & Conditions for the Employment of Provincial 



487- 



Administrators in the National Public Service (Terms <& Conditions,) In 
addition, the Plaintiff claimed interest and costs. 

13. On 26 March 2001, the Acting Solicitor-General John Kawi wrote to the 
Winnie Kiap, NEC Secretary advising of the Plaintiffs claim and seeking 
instructions for the purpose of preparing a Defence on behalf of the State. 
The NEC Secretary did not respond, and the Acting Solicitor-General wrote 
to the Chief Secretary to the Government in pursuit of instructions. 

14. On 27 July 2001, the Plaintiff obtained Default Judgment on liability against 
the State, for damages to be assessed. The State had failed to file a Notice of 
Intention to Defend and a Defence on time: 

• The Writ of Summons was served on the State on 21 June 2000, 

• The State was required to file its Notice of Intention to Defend by 21 

July 2000, and 

• its Defence by 21 September 2000. 

The State had defaulted by more than one (1) year. 

15. Following that, on 28 February 2003, Zacchary Gelu, the Acting the 
Solicitor-General at the time, counter-signed a Deed of Release settling the 
Plaintiffs claim in the sum of K468,305.89, including K79/785.55, being 8% 
interest for a period of two (2) years. 



List of Documents 





DATE 


DOCUMENT 


COMMENTS 


1 


30 November 1999 


Letter from the Secretary, 
Department of Personnel 
Management to the Plaintiff. 


The letter informs the Plaintiff of his appointment as 
Administrator for Western Province to replace the Acting 
Provincial Administrator, Wesley Malaisa. 


2 


1 February 2000 


Letter from the Plaintiffs 


Notifying the Solicitor-General of the Plaintiffs 



488- 







lawyers, Paul Paraka Lawyers to the 
Solicitor-General 


intention to apply for judicial review in the form of a Writ 
for Mandamus to compel the State to gazette his 
appointment and progress the preparation and signing oi 
the Employment Contract. 


3 


14 Match 2000 


Letter from the Acting Solicitor- 
General to Paul Paraka Lawyers 


Acknowledging receipt of the Plaintiffs section 5 notice 
and advising that a response will be provided once 
instructions are confirmed. 


4 


12 May 2000 


Letter from Paul Paraka Lawyers to 
the Solicitor- General 


Providing notice of the Plaintiffs intention to bring a 
claim against the State, in compliance with the 
requirements of section 5 of the Claims By & Against the Statt 
Act 1996. 


5 


12 June 2000 


Writ of Summons filed by Paraka 
Lawyers on behalf of the Plaintiff. 


The Statement of Claim alleges breach of the Terms and 
Conditions of the Standard Contract of Employment for 
Provincial Administrators (Terms <& Conditions^ and 
seeks a total of K388, 517.12 as assessed in accordance 
with the different heads of allowance under the Terms & 
Conditions. The Plaintiff also seeks an order for interest 
and costs. 


6 


15 January 2001 


Notice of Motion filed by Paul 
Paraka Lawyers on behalf of the 
Plaintiff 


The motion seeks the entry of default judgment in the 
sum of K388,517.12 plus interest and costs, as pleaded in 
the Statement of Claim. 


7 


15 January 2001 


Affidavit of Andrew Kongri sworn 1C 
[anuary 2001, filed by Paul Paraka 
Lawyers 


The affidavit was filed in support of the Plaintiffs motion 
for default judgment 


8 


15 January 2001 


Affidavit of Tau Liu sworn 10 January 
2001, filed by Paul Paraka Lawyers 


The affidavit was filed in support of the application for 
default judgment 


9 


15 January 2001 


Affidavit of Search sworn by Erick 
Ontimo on 10 January 2001, filed by 
Paul Paraka Lawyers 


Filed in support of the Plaintiffs motion for default 
judgment essentially confirming that the State defendant 
had not filed a Notice of Intention to Defend and a 
Defence. 


10 


26 March 2001 


Letter from the Acting Solicitor- 
General, John Kawi 


Advising of the Plaintiffs claim and seeking initial 
instructions from the NEC Secretary as to the 



489- 



to the NEC Secretary. 



NEC's/State's positions as regards the PlainriffiT claim. 



11 



12 June 2001 



Letter from the Acting Solicitor- 
General John Kawi to the Chiefjfrom 
Secretary 



The letter makes reference to instructions sought earlier 
the Secretary to the National Executive Council 
(NEC) and the lack of response, and advises of the 
Plaintiffs impending application for default judgment. In 
this letter the Acting Solicitor-General also inquires as to 
the Plaintiffs employment status in the Public Service. 



12 



17 July 2001 



Notice of Motion filed by 
Paraka Lawyers 



PaulfThe application by the Plaintiff seeks to withdraw the 
NOM filed 15 January 2001, and the entry of default 
judgment against the State in the sum of K388,517.12; oi 
alternatively, for damages to be assessed. 



13 



18 July 2001 



Affidavit of Guguna Kila Garo swornfThe 

17 July 2001 and filed by Paul ParakaJPlaintil'f 

Lawyers. 



affidavit was filed in support of the application by the 
intiff seeking default judgment. 



14 



18 July 2001 



Affidavit of Search sworn by 
Ontimo on 18/07/01 and filed 
Paul Paraka Lawyers. 



EriclThe affidavit supports the Plaintiffs application for default 

by judgment and states basically that the State had not filed a 

Notice of Intention to Defend nor a Defence as at the date 

of the affidavit. 



15 



6 August 2001 



Letter from the NEC Secretary 
the Acting Solicitor-General 



to In 



this letter, Winnie Kiap takes issue with the Acting 

Solicitor-General's request to the Chief Secretary to 

advise or direct" her to respond to an earlier letter from 

the Acting Solicitor-General dated 26 March 2001 seeking 

instructions in respect of the Plaintiffs claim. 



Kiap also instructs that the Plaintiff- "was nevet 

appointed to the position of Provincial Administrator — western Province. 
NEC Decision No. NG 1 1 2 / 99 appointed Mr Uu as Administrator, 
but the process for appointment as prescribed by section 73(2) of tht 
Organic baa I on Provincial and 



490- 



Local Level Governments was never completed. That is, the 
appointment was not gazetted... " 



16 



August 2001 



Court Order for DefaultThe 
Judgment filed by Paul 
Paraka Lawyers 



Order is for: 

"JUDGMENT, in default of filing a 
Notice of Intention to Defend and 
Defence, THAT the Defendant shall pay 
the Plaintiffs damages to be assessed." 



17 



8 August 2001 



Letter from Paul ParakaEnclosin: 
Lawyers to the Acting 1 
Solicitor-General 



g by way of service sealed Court 
Order for default judgment made 8 August 
2001. 



27 August 2001 



Letter from Paul ParakaEnclosin; 
Lawyers to the Acting 
Solicitor-General 



g Notice to Set Down for Trial for 
the Solicitor-General's consent and 
endorsement. 



19 



28 August 2001 



Affidavit of Tau Liu swornThi: 
28/08/01 and filed by Pau|for 
Paraka Lawyers. 



s affidavit was filed in preparation for trial 
assessment of damages. 



20 



7 September 2001 



Letter from Paul ParakaThe 
Lawyers to the Acting. 
Solicitor-General 



letter follows up with the Notice to Set 
Down for Trial, serves the above Affidavit of 
the Plaintiff on the State and gives notice of 
the Plaintiffs intention to rely on the said 
Affidavit. Further, it sets out the Plaintiffs 
submission seeking an out-of-court 
settlement. 

491- 











21 


8 October 2001 


Letter from Paul Paraka Lawyers to 


Pursuing draft Notice to Set Down for Trial land the 






the Acting Solicitor-General (J. 


Plaintiff" s submission for out-of-court settlement. 






Kawi) 




22 


30 October 2001 


Consent Order dated 26/10/01 filed 


Granting the Plaintiff leave to file an Amended Statement 






by Paul Paraka Lawyers 


of Claim (incorporating claim for compensation for anxiety 
etc.) 


23 


30 October 2001 


Amended Statement of Claim 


The amendments incorporate an additional claim for 






(Amended pursuant to Consent 


damages for distress, frustration, anxiety and hardship. 






Order dated 26 October 2001) filed 








by Paul Paraka Lawyers 




24 


12 November 2001 


Letter marked "Without Prejudice" 


Discussing the applicability (or lack thereof) of the Petei 






from Solicitor- General Q. Kawi) to 


Aigib case relied on by the Plaintiff in his submission for 






Paul Paraka Lawyers 


settlement in respect of his claim for damages for stress 
and anxiety (distress, frustration and hardship.) 


25 


19 November 2001 


Letter from Paul Paraka Lawyers to 


Forwarding Notice to Set Down for Trial for endorsement 






the Acting Solicitor-General 


by the Solicitor-General. 


26 


28 November 2001 


Notice of Motion filed by Paul 


Seeking to set the proceedings down for trial for 






Paraka Lawyers 


assessment of damages. 


27 


28 November 2001 


Affidavit of Guguna Garo sworn 


[n support of the Plaintiffs application to set the matter 






27/11/01 and filed by Paul Paraka 


down for trial. 






Lawyers 




28 


10 December 2001 


Letter from Paul Paraka Lawyers to 


Enclosing fresh set of Notice to Set Down for Trial for 






the Acting Solicitor-General 


endorsement. 


29 


13 December 2001 


Letter from the Solicitor- General (J. 
Kawi) to Paul Paraka Lawyers 
enclosing duly endorsed Notice to 
Set Down for Trial 




30 


19 February 2002 


Letter from Paul Paraka 


Pursuing the Plaintiffs submission for an out-of- 



492- 



Lawyers to the Solicitor- General 



court settlement and outlining the Plaintiffs argument 
based on the DPM Secretary's representation. 



31 



26 February 2002 



Notice of Motion filed by PaulThe 
Paraka Lawyers 



Plaintiffs application for leave to further amend his 
Amended Statement of Claim. 



32 



26 February 2002 



Affidavit of Guguna Garo filed 
Paul Paraka Lawyers 



byln support of the Plaintiffs application to further amend 
his Amended Statement of Claim. 



33 



14 March 2002 



Letter from Paul Paraka Lawyers to 
the Solicitor- General advising that 
the Plaintiffs NOM filed 14 February 
2002 had been adjourned for hearing 
on 15 March 2002. 



34 



18 March 2002 



Letter from Paul Paraka Lawyers to 
the Registrar National Court 



Requesting that the Plaintiffs Notice of Motion filed on 26 
February 2002 be set for hearing before a Judge other than 
Kandakasi J (designated Motions Judge) who had 
disqualified himself from hearing the Plaintiffs 
application. 



35 



10 April 2002 



Court Order filed by Paul Paraka Granting 
Lawyers 



the Plaintiff leave to further amend his 
Amended Statement of Claim and file a Further Amended 
Statement of Claim within 7 days, and that the State file a 
Defence to same within 14 days after service of the 
Further Amended Statement of Claim. 



36 



12 April 2002 



Amended Amended Statement 
Claim filed by Paul Paraka Lawyers 



oijThe amendments incorporate the Plaintiff s claim that the 
DPM Secretary had represented to him that he would sign 
a Contract and be paid at the usual Administrator's rate, 
hence he had commenced employment as the 
Administrator of Western Province on the reasonable 
expectation that his appointment would be finalized and 
he would sign the Contract. 



37 



26 April 2002 



Letter from Paul Paraka Lawyers 
the Solicitor- General 



toAlerting the State of its omission to file a Defence to the 
Plaintiff s Amended Amended Statement of Claim within 
the required period, and enclosing Notice to Set Down for 
Trial for assessment of 



493- 









damages. 

The letter also mentions the Plaintiffs submission for an 

out-of-court settlement. 


38 


6 May 2002 


Notice of Motion filed by Paul 
Paraka Lawyers 


The motion seeks an order that the proceedings be set 
down for hearing in respect of assessment of damages. 


39 


6 May 2002 


Affidavit of Jerry Kiwai sworn 
03/05/02 and filed by Paul Paraka 
Lawyers 


Filed in support of the Plaintiffs application fox an ordei 
that the proceedings be set down for trial for assessment oi 
damages. 


40 


14 June 2002 


Letter from Paul Paraka Lawyers to 
the Acting Solicitor-General 


Advising the solicitor-General: 

of the Plaintiffs intention to rely on the affidavit 
he swore on 6 September 2002 and 

that the Plaintiffs lawyers had filed the duly 
endorsed Notice to Set Down for Trial and would attend 
the next civil call over to obtain a trial date. 


41 


14 June 2002 


Copy of a letter from Paul Paraka 
Lawyers to the Registrar, National 
Court 


Requesting the Registrar to list the Plaintiffs claim on the 
call over listing for the allocation of a hearing date. 


42 


2 July 2002 


Letter from Acting Solicitor- General 
[ohn Kumura to Guguna Garo oi 
Paul Paraka Lawyers. 


Notifying the Plaintiffs lawyers of the Solicitor- General's 
intention to cross-examine the Plaintiff on his affidavit 
sworn 6 September 2002. 


43 


25 September 2002 


Letter from Paul Paraka Lawyers to 
Zacchary Gelu (Solicitor-General) 


The letter proposes a submission for settlement that 
includes arguments on the basis of a representation from 
the DPM Secretary, and encloses amongst others, a draft 
Notice of Motion for judgment in the amount oi 
K400,517.12. 


44 


25 September 2002 


Draft Notice of Motion prepared by 
Paul Paraka 


The draft Notice of Motion seeks an order that the State 
pay the Plaintiff the sum of K400,517.12 



494- 



Lawyers 



in full and final settlement of this action. It also annexes a 
document entitled Instrument of Consent signed by Hubert 
Namani of Paul Paraka Lawyers including a slot for the 
Solicitor-General's (Gelu) consent and signature. 



45 28 February 2003 



Deed of Release prepared by Paul 
Paraka Lawyers and signed by the 
Plaintiff (Releasor) and Zacchary 
Gelu on behalf of the State. 



46 10 July 2003 



Letter from Secretary Finance 
Thaddeus Kambanei to Johnand 
Kumura, Acting Solicitor General 



Enclosing Court Orders in both proceedings, (WS 501/99 

WS 654/00) and requesting assessment and clearance 

on the said orders before payments could be made. 



47 4 September 2003 



Letter from the Plaintiff to the 
Secretary for Justice and Attorney- 
General's Department 



Seeking the Attorney General's authorization for payment 
of his two (2) claims settled by Deed of Release on 28 
February 2003. 



48 



Finance Department Cash Book 
Record and Payment 

Advice /Vouchers 



D. Findings 



17. The Claim - Liability and Quantum 

(a) Liability 

Liability had been settled by default occasioned by the failure or 
omission on the part of the NEC Secretary to provide the Solicitor- 
General with the NEC's instructions particularly in relation to the 
State's Defence to the Plaintiffs claim, within a reasonable time. 



495- 



(b) Quantum - Assessment of Damages 

The State should have allowed the matter to proceed to trial for assessment of 
damages. It is considered that a proper trial of the matter would have resulted 
in the Court upholding the State's position that the Plaintiff had been paid due 
compensation in the form of the K30, 00.00 ex gratia payment. 

In light of the above it is therefore considered that the amount paid by the 
State in settlement of the Plaintiffs claim is exorbitant, unreasonable and may 
have been calculated with a view to defraud the State of a large sum of money. 

18. Steps taken or not taken by the Attorney-General & Solicitor-General 

The Solicitor General 

The Solicitor-General had failed to file a Notice of Intention to Defend and a Defence 
and continued failing to life a Defence, on the various times the Plaintiff amended his 
Statement of Claim. 

The Attorney General 

The Attorney General could not have done much at this stage as the matter was in 
court and it was the duty of the Solicitor General to take steps to defend the claim, 
which could not take place because of the failure of the Office of the Secretary of 
NEC to provide instructions required by the Solicitor General. 



19. Compliance Issues: 



496- 



20. (a) Public Finance (Management) Act 

There is no clearance letter from the Attorney-General or the Solicitor- 
General to authorize payments to the Plaintiff, which letter is a prerequisite to 
settlement/payment of any judgment debts, etc (refer to Yer's evidence.) 

(b) Claims By <& Against the State Act 1996 

On 01 st February 2000, the Plaintiff through his lawyers, Paraka Lawyers, 
wrote to the Solicitor General and gave notice of their client's intention to 
make a claim against the State. 

In that letter, Mr. Kongri of Paraka Lawyers stated that since bis clients' appointment to the 
position of Administrator of Western Province, the Legislative Council had not prepared the 
relevant instrument and also had not arrangedfor its execution and ga^ettal to complete the 
process of appointment in accordance with the provisions of the Organic Law on 
Provincial and Local Level Government. Consequently they were instructed to apply 
for Judicial Preview and seek an Order in the nature of Mandamus against the First 
ive Council and the State. 



At no time at all or anywhere in the said letter did the Plaintiffs Lawyers state 
that the claim was for damages for unlawful termination, which turned out to 
be the allegation raised in the proceedings and eventually settled by the 
Solicitor General through the Deed of Release dated 28 February 2003. 

That being the case, it is obvious that ,the Plaintiff never gave the section 5 
notice of his claim as set out in the Court Proceedings 



497- 



(WS654/00), which is totally different to an application for Judicial Review, 
which was the basis of their letter of 1 st February 2000. 

Despite that, the Solicitor General accepted and acknowledged the Plaintiffs 
Lawyers' letter of the 1 st of February 2000 as the letter giving the appropriate 
notice required by the Claims By and Against the State Act, 1996. 

Frauds <& Limitations Act 1988 

The cause of action arose on or about 25 th December 1999, when the Plaintiff 
was recalled and his appointment revoked by the NEC; and the Plaintiff filed 
these proceedings in 2000. Therefore, there is no issue as to the validity of the 
claim under this heading. 

Attorney- General Act 1989 

Similar to the other claim by Tau Liu in Court Proceedings- WS 501 of 1999, 
Mr, Gelu, the Solicitor General at the relevant time, without giving much 
consideration to the validity of the claim, or the fact that, the matter was 
already been set down for assessment of damages in court, acted to the State's 
detriment when it signed the Deed of Release, which is an act outside the role 
and or the function of the Solicitor as stipulated in the Attorney Generals Act 
1989. 

NEC Decisions 

As in the other case (WS 501 of 1999) the Deed of Release was signed on 28 
February 2003 at which time NEC Decision NG 07/2002 (Decision) was in 
place. Clauses 10 and 12 of the Decision: 



498- 



(i) Clause 10 - directed that there be no more out of court settlements by 

any State body or authority, including the Attorney-General and the 
Solicitor-General, without the approval of the NEC, acting on advice 
from the CACC and 

(ii) Clause 12 - directed that no public officials, including Ministers and 
heads of departments and public bodies, are to commit the State to 
any new contractual obligations through agreements beyond the 
approved amounts in the 2002 supplementary budget. 

Again, like the other matter, there does not appear to be any approval sought 
or obtained from the NEC nor any advice from the CACC to legitimize the 
Deed of Release by which the Plaintiffs claim was finally settled. Accordingly, 
it is arguable that the Deed of Release was improper. 
Recommendations 

Amendments to relevant Legislations 

Claims By and Against the State Act & Attorney General Act 

• Amend both legislations to include specific provision as to: 

1 . The type of matters that can only be determined by the Courts 

2. The type of matters that can be settled out of Courts 

3. The Officer who would be authorized to settle claims of Courts 

4. The amount, the Officer with the authority to settle can settle on 

• In addition include provisions to: 



499- 



1 . Make it compulsory for the State officer handling a claim consider preliminary 
issues, such as Standing and time limitation. 

2. Require the claimant to also give a copy of the section 5 notice to the head of 
department responsible for the claim. 

3. The Departmental Head/his delegate must be required to provide instructions 
within 30 days to the SG. 

4. Make provision for offences/charges to be laid on officers of both SG and the 
respective Government or Department, who fail to comply with the 
requirements to give instruction. 

5. If a matter is to be settled out of Court, the appropriate Officer/Officer with 
authority must get written consent of the Departmental Head to settle. 

SG must always consult the AG and/or report to the AG for all claims against the 
State. 

If a matter is to be settled out of Court on agreement by parties, such claim must be 
sanctioned by the Court first. 

The Deed of Release must be signed and sealed with the Seal of the State to be 
endorsed by both the SG and the Action Officer of SG. 

Re: Finance, payment must be only made on advice of the SG on production of all 
necessary documents. 



500- 



(c) Soiat Williams 
PARTIES 

For The State: 

(a) Solicitor General and Attorney General 

(b) Department of Personnel Management For 
the Defendant 

(a) Soiat Williams Others 

(a) Department of Finance 

(b) Ministry of Public Service 

(c) Office of the Prime Minister 

DOES THE MATTER FALL WITHIN THE TERMS OF REFERENCES 

The matter falls within the Terms of Reference ('TOR 3 ).The value of this claim is in excess of K300, 
000. 

The applicable terms of reference are TOR a (1), 2, 3, 4 & 5 THE MATTER 

Mr. Soiat Williams, former Secretary for Department of Personnel Management claimed damages 
for the unlawful revocation of his appointment as Departmental Head for Personnel Management 
on 30 November 2000. 

Mr. Williams signed a Contract of Employment as Departmental Head for PS on 28 th July 2000 with 
the Governor General, Sir Silas Atopare, on behalf of the State. Mr. John Kali, Deputy Secretary- 
DPM signed as witness. The contract was for term of 4 years. 



501- 



On the 1 6 th of November 2000 (3.5 months in to the term) the Minister for Public Service then Philemon 
Embel suspended the newly appointed Secretary -Soiat Williams from duties with full pay taking 
effect on the day of his letter. 

On the 17 th of November 2000 Soiat Williams responded to the letter by Minister for Public Service 
in regard to his termination, letter to Minister is marked as 207- 

On 22 nd November 2000, Patterson Lawyers acting on instructions of Mr. Williams served on the 
Office of the Attorney General, notice pursuant section 5 of the Claims by and Against the State Act, 
1996 

On 23 rd November 2000, Patterson Lawyers filed Originating Summons 689 of 2000 in the National 
Court seeking declaration that 

1 . the purported suspension of Mr. Williams by the Minister for Public Service on 1 6 th 
November 2000 was invalid, null and void and of no legal effect; and 

2. Mr. Williams was the legal Secretary for DPM 

On 18 th January 2001, the State through the Office of the then acting Solicitor General, Mr. Gelu 
filed its Notice of Intention to Defend the claim (Ref 134) 

Whilst the matter concerning the proceedings was on going, Mr. Kawi (former SG) in response to 
Mr. Tsiamili's request for an opinion on the legality concerning the revocation of the employment of 
Mr. Williams advised as follows; 

" prior to a Departmental Head been terminated by the Head of State acting on 

advise from the National Executive Council, without notice it is imperative that disciplinary 
procedures under section 27 of the Contract of Employment must be complied with. 



502- 



From the allegations made by the Plaintiff (Soiat Williams), it appears we have the daunting 
task of explaining to the Court why the disciplinary procedures under Section 27 of the 
Contract of Employment were not complied with, prior to the termination of the Plaintiffs 
Contract of Employment." 

By letter dated 15 th May 2001, the Office of the Secretary, DPM provided specific advice and 
instructions to the Attorney General and Solicitor General to defend the allegations under OS 
proceedings 689 of 2000. The Department advised that Mr. Williams was terminated in the interest 
of the State and not under the allegations of misconduct because the then Minister for PS had 
withdrawn the charges. (See 69-DPM) 

Records obtained from the Department of Personnel Management indicate that on 29 th April 2002 
DPM advised Mr. Williams on the final pay out on his contract. Mr Williams acknowledged and 
accepted the payment of K407, 003.63 (DPM 5) as final clearance and deed of release to 
acknowledge receipt of final contract terminations benefits. Mr. Williams acknowledged the letter 
on 2 May 2002 with the notation. "I have signed the letter at the request of its employer. " 

Despite the letter containing specific advice and instructions from the DPM to defend the claim, the 
then Acting Solicitor General, Mr. Gelu executed a Deed of Release on behalf of the State with Mr. 
William for the sum total of K500, 000.00 on 17 th February 2003.(Ref 37DOR). This payment is 
considered to be a double payment of the moneys akeady accepted to be the final payment for the 
termination of contract. 

Compliance with Claims By & Against The State Act 

On the 22 nd of November 2000 Patterson Lawyers on behalf of the plaintiff wrote to the Attorney 
General advising of Soiat Williams, notice pursuant to claim by and against the State. 



Action by Solicitor General/ Attorney General 

503- 



The Deed of Release dated 17 th February 2003 was highly irregular, illegal and improper 

> Prior to executing the said DoR by Zacchary Gelu he failed to take instructions from the 
employer, acting on behalf of the state, in this case the Acting Secretary for the Department 
of Personnel Management, who is specifically responsible for the administration of the 
Departmental Heads Contracts of employment. 

> Further, Mr Zacchary Gelu chose to proceed with his own DoR in the absence of any Court 
Order or instruction for the Secretary for DPM on this matter. 

Settlement 

On the same day the DoR was signed, a letter was written to Thaddeus Kambanei - Secretary for 
Finance attention to Mr Boas Hembehi to raise a cheque to setde the claim in the sum of K500,000 
and have it made payable to Soiat Williams ,P O Box 3762,Boroko,National Capital District. 

According to the information provided to the commission, DPM paid in full final entidements in the 
sum K407,003.60 (CheqNo. 22030688). Reference is copy of cheque made to Soiat Williams. 

Department of Finance payments 

As per the cash book one payment was made, cheque No. 793025 - K52,320.46 on the 1 9 th of 
October 2004 in relation to this claim during the period covered in the terms of reference and the 
subsequent years (2007 & 2008). According to Mr Williams this payment was in relation to his 
vehicle allowance whilst with DPM. No payment was made on the second DoR for K500,000 



Department of Personnel Management 

504- 



The second DoR signed was improper and to make (if any) payment without the consent of the 
Department of Personnel Management (DPM) who is the only authority on the calculations for 
Salary & Wages and Public Service Payouts was considered ILLEGAL. Knowingly that the initial 
DoR was signed between DPM and the plaintiff, was accepted and received in May 2002. 

Findings 

■ On dae 02 nd of May 2002 a Deed of Release was signed by DPM and Soiat Williams, 
whereby he (Soiat Williams) accepted final receipt of termination of contract as Secretary 
in the sum of K407,003.63. Marked as is the initial DoR. 

■ The 2 nd DoR of K500.000 signed by Zachery Gelu (former SG) was without the consent 
of Department of Personnel Management (DPM). By law DPM are the only authorised 
agents on the calculations for the Salary 7 & Wages and Public Services Pay outs. In this 
instance DPM did not endorse the principle claim of K500,000 or more. Further, the 
claim was never brought to the attention of DPM according to information provided and 
on file. 

■ The claim had a OS No. 689 of 2000, however, the court was never informed of the 
second DoR signed between Solicitor General -Zacchary Gelu and Soiat Williams. 

■ The Registrar-Supreme & National Court — Ian V Augerea in a letter on the 23 rd March 
2007 wrote to Mawa Lawyers advising the OS No 689/2000 was listed for summary 
determination on the 20 th of April, 2007. Marked this letter as 

■ Mr Williams advised the Commission that ajull bench Supreme Court has ruled in Mr Williamsfavour. 
Copies of Supreme Court ruling have been provided andfiled. 

■ The court's ruling was due to no defence filed by the state for its action. 



Recommendation 



505- 



The Solicitor General to institute proceedings to set aside the Deed of Release dated 17 th 
Febraury 2003 and to recover the full amount of K500, 000.00. 



(d) Isaac Lupari * 

V 

1. Isaac Lupari v. Department of Finance and the State 

2. Isaac Lupari v. Department of Defence and the State 

3. Isaac Lupari v. Department of Personal Management and the State 

4. Isaac Lupari v. Dept of Transport & Civil Aviation and the State 

Mr. Isaac Lupari sued the State for breach of four separate contracts that were entered into as 
Secretary for the Departments of Finance, Defence, DPM and Transport in that order. He claimed 
that he had been unlawfully terminated from all those positions after serving short stints in each and 
claimed the balance of all pay and entitlements for the unexpired period of all four contracts. It will 
be clear from the evidence gathered so far that Mr. Lupari never suffered any loss of pay and 
entidements and was adequately remunerated by the State for the whole time that he claimed for 
and beyond. In fact up to July 2009 he was still on the Government payroll. 



In an analysis done by DPM it was said that ... "The real life period covered by the contracts on which Mr. Lupari was 
engaged is a 6 year 9 month period from start offirst contract 1 7/ 09/ 97 through to the end of last contract 28/06/04. 
Compared to the 6year 9 months period he is in fact making claims for a total 14 year period, 
by placing the contract periods end to end, when in fact they overlap. Apart from being contrary to 
public polity and the contractual provisions, the claims are clearly improper because they result in triple and sometimes 
quadruple payments for the same period of time. Mr. Tupari has received salaries, allowances and ben fits continuously 
from 17/09/97 to the present day. He has lost no remuneration and has been paid a totalKI ,294,1 33for the 4 
V^earperiod17/09/97to 17/04/02". 



The above analysis is a succinct statement of what is wrong with Mr. Lupari's claims against the 
State. Mr. Lupari had been transferred from one department to another and had not uttered a single 
word in protest until after the last contract of employment as Secretary for Transport and Civil 
Aviation. Even then he was far from being destitute as 

507- 



he was still engaged by the Government of PNG in various capacities and paid very well in 
various Advisory roles. 

A. DOES THE MATTER FALL WITHIN THE TERMS OF REFERENCE? 

The matter falls within the following Terms of Reference No 1,2, 3, 5, 8, 9 and 12. 

The claim was improper, was for an amount exceeding PGK300,000.00 and was paid out 
between 2000 and July 2006. It resulted from failure of the Solicitor General to properly 
defend the State and was settied out of court. Payments were also not made out of lawfully 
available funds. 

B. SOURCES OF INFORMATION AND DOCUMENTATION 

This brief comprises of facts and findings from the files and records of: 
Department of Finance 
Department of Personnel Management. 
Department of Prime Minister and NEC 
Governor General's office. 
Mr. Isaac Lupari himself 

Newspaper reports and paid advertisements by Mr. Lupari. 
Letters written by concerned citizens 
Evidence of Ms. Margaret Elias (Secretary for DPM) 
Evidence of Mr. John Kali (Deputy Secretary for DPM) 
Evidence of Mr. Ian Augerea (Registrar of National and Supreme Court) 
Evidence of Ms Winnie Kiap (Secretary for NEC) 
Evidence of Mr. Eric Kiso (Assistant Registrar National Court) 
Evidence of Mr. Billy Bonner (File Manager, Paul Paraka Lawyers) 

BACKGROUND: RELEVANT FACTS 



508- 



THE MATTER 



Mr. Lupari first filed four Writs of Summons No. 1788, 1789, 1792 and 1793 of 2001. 
All four Writs were filed on the 11 th of December 2001. The Solicitor General failed 
to file a Defense and default judgment was entered against the State with damages to 
be assessed. 

In 2002 Mr. Lupari reached an understanding with the newly installed Somare 
Government that he would be appointed as the new Ambassador representing Papua 
New Guinea at the European Union based in Brussels. In gratitude Mr. Isaac Lupari 
agreed to drop all four court actions he had filed. Mr. Lupari instructed his lawyers to 
discontinue the four court actions and this was done in August 2002. 

Having secured the job of European Union Ambassador, Mr. Lupari reneged on the 
above deal in which he had promised not to pursue his claims against the State. A 
short five months after he had withdrawn the first lot of claims he instructed his 
lawyers to file the same court actions again. The four Writs of Summonses were 
numbered consecutively from 88 to 91 of 2003. The claims were exactly the same as 
those filed in 2001. The writs were filed on the 13 th of January 2003 by Paul Paraka 
lawyers — 

Less than two months after the second lot of Writs were filed, a Deed of Setdement 
was signed on the 03 rd of March 2003 by Mr. Zachary Gelu acting on behalf of the 
State. See Certificate of taxation filed on the 04 th of March 2003 and Zachary Gelu's 
endorsement of the Instrument of consent dated 03 rd March 2003 (annexure NC-36). 
Even after the matter was setded, a Notice of Intention to Defend was filed by the 
Solicitor General on 11 th March 2003. A day later on the 12 th March 2003, a Notice 
of Withdrawal was filed by Paul Paraka lawyers. 



509- 



5. Under the four Deeds the State was made liable to pay amounts allocated 
as follows; 

PGK 949,233.94 for breach of Employment Contract as Finance 

Secretary. 

PGK 949,233.94 for breach of Employment Contract as Defence 

Secretary 

PGK 1,174,494.79 for breach of Employment Contract as DPM 

Secretary 

PGK 630.498.64 for breach of Employment Contract as Transport 



Secreta 




CHRONOLOGY 

Isaac Lupari began his career in the Public service on the 1 8 th of February 1 988 (see 
clause 6 of employment contract as secretary for Transport). Nine years later in 1997, 
it appears that he had made it into the top echelons of the civil service. He was 
appointed Secretary for department of Finance on 17 th September 1997 by the Skate 
government. A contract was signed on the 10 th October 1997. He says that he was 
sacked five months later on the 15 th January 1998. 

If he was sacked, he was not out of work for very long. In fact he was reappointed on 
the very same day to the position of Secretary for Defence. No contract of 
employment was in fact signed by Mr. Lupari. He concedes this in volume two of his 
reply to the COI and asserts that the contract was a deemed contract and the signing 
bit was a mere formality. In fact there is a reference made by Peter Tsiamalili that 
Lupari was acting as Defence Secretary and never signed a contract for the position. 



510- 



3. One year and three months later on 17 th March 2000 he was appointed 

Secretary for Department of Personnel Management (DPM) by the newly 
installed Morauta government. Lupari lasted a very short four months as 
Secretary for DPM. 

The last of the contentious senior positions he was appointed to was as Secretary for 
the department of Transport and civil Aviation for a term of three years (clause 3). 
He was appointed on the same day as his term as Secretary DPM came to an end on 
the 29 th of June 2000. Mr. Lupari claimed full pay and entitlements for the unexpired 
term of his contract as Secretary for DPM. Out of Court setdement was reached by 
signing of the DOR and an amount of PGK 1,174,494.79 was specifically awarded 
for the alleged breach of this contract. He was actually paid PGK 1 million by 
Finance on the 17 th September 2004 by cheque No. 790468. 

The above payment should never have been allowed in the first place by the SG and 
later approved by Mr. Damem as AG. The terms of the contract of employment as 
Secretary Transport explicitly declare in the first recital fhat:- 

'THIS AGREEMENT is made to be effective on and from the 29 th June 2000 (to vary the 
agreement entered into on the 17' h day of March 2000 by the parties)". .. 

4.1 - The first clause of the agreement reiterated this condition. It also made 
provision for Mr. Lupari to be paid on the same terms and conditions as in 
his previous position at DPM, a Central Agency department. Clause 1 reads 



'This Agreement varies and replaces the Agreement entered into by the Departmental Head 
on 1 7 th March 2000, provided that the Departmental Head shall continue to enjoy the 
unchanged terms and conditions of a departmental Head of a Central Agency. " (emphasis 
added). 



511- 



4.2 Further proof that Mr. Lupari's contract as Secretary for DPM was not unlawfully 
terminated also comes from the Recitals. It shows that when Mr. Lupari signed 
the contract as Transport Secretary he did so knowing that he would be moved 
from his position as Secretary DPM to the position of Secretary Transport and 
Civil Aviation. The Pertinent part states; 

'WHEREAS 

The State has created the position of Secretary ... Transport... and 

and 

The Departmental Head is employed on a contract of employment executed by the 
Head of State effective on and from 1 7 lh March 2000, by virtue of his appointment as Secretary 
for the Department of Personal Management, 

Head of a Central Agency. " 

Clause 3 of the Agreement prescribed the period that the contract for Transport 
Secretary would run for. It stated that the new contract would run from the date Mr. 
Lupari was appointed as Secretary for Department of Personnel Management, being 
17 th March-2000 and expire on 16 th March 2004, 4 years hence. Effectively this meant 
that Mr. Lupari's earlier contract was now subsumed under the new contract. In other 
words the two became one contract and not two separate contracts under which Mr. 
Lupari could claim for damages, separately. 

The Commission is unable to make a conclusive finding as whether Mr. Lupari was 
unlawfully terminated as Secretary for Transport. There is evidence that shows that 
Mr. Lupari was not idle after being "sacked". He was employed as a consultant in two 
positions between 2002 and 2003 



512- 



before being appointed as Ambassador to the European Union (EU) on the 15 th 
December 2003. 

The first of these consultancies was as Project coordinator for the Waigani office 
development project aimed at refurbishing the condemned Marea Haus better known 
as the Pineapple building and the Central Government Building. He was engaged on 
the 30 th of July 2002 and paid PGK306,490.00 per annum. The consultancy contract 
was terminated by the State on 19 th March 2003, four months before completion by 
the Acting Secretary for DPM, Mr. John Kali. Mr. Lupari was paid out for the 
remainder of his contract term, by now a normal conclusion to Mr. Lupari's contracts 
with the State. 

He was next appointed as Economic Advisor to the Prime Minister on the 30 th 
September 2002. This appointment was made when Mr. Lupari was still legally 
contracted to DPM up to March 2003 [refer annexure OD 17]. This meant that he 
was concurrently employed. But no contract was signed for this later consultancy as 
Economic Advisor. Despite that he was paid out the full fees for the purported 
consultancy agreement as Economic Advisor before he was appointed as 
Ambassador to the EU. It is not known when he was recalled but he was appointed 
Chief Secretary on the 20 th July 2007. 

From the documents furnished by the Department of Personnel Management, it is 
clear that Mr. Lupari was continuously employed by the State between his first 
appointment as Secretary (17/09/97) right up to the date when his last contract was 
to expire (28/06/04). Set out below are the various jobs he held during that period: 



Finance Secretary - 17/09/97 to 15/01/98 

Defence Secretary 15/01/98 to 09/12/98 



513- 



Acting Secretary for Works - 09/12/98 to 

18/02/99 

Special Advisor to Prime Minister - 19/02/99 to 

19/07/99 

Special Advisor to Pub. Serv. Minister - 20/07/99 to 1 7/04/00 

DPM Secretary - 17/03/00 to 29/06/00 

Transport Secretary - 29/06/00 to 14/04/01 

Special Projects officer DPM -14/04/01 to 14/04/02 
Coordinator - Waigani Building project -30/07/02 to 19/03/03 

j) Economic Advisor to Prime Minister - 30/09/02 to 15/12/03 

k) Ambassador to European Union - 15/12/03 to ? 

1) Chief Secretary to Government - 20/07/07 (still on full 

pay) 

Referring to the above, the only time he was not working in any capacity was between 
h) and i) for a period of five months. His contract as project coordinator for the 
Waigani office project was terminated four months before completion and he was 
paid the balance of his consultancy, but while still serving out that term, he was 
appointed as Special Advisor to the PM which was also not served to its end although 
Mr. Lupari received full pay for that final consultancy prior to taking up the 
Ambassadorial job. 

In instructions given to the Solicitor General to defend the claims, the late Mr. Peter 
Tsiamalili, then DPM Secretary said the following in his letter to the Solicitor General. 

In his statements of claim, Mr. Lupari has not declared the 6 months severance 

payment as Special Advisor to the Prime Minister (5 months - 
paid Kl 73, 871. 00), the 18 months ex-gratia payment on termination as 

Secretary for Transport (paid K508,723.00). 

Mr. Lupari suffered no loss. He has enjoyed full employment moving from one 

position to another and receiving full payment as head of a 



514- 



central agency department. He has received an estimated Kl,294,l 33-00 in 
salaries, allowances and benefits, (para 13) 

■ Furlough Leave - plaintiff claimed separate amount for furlough leave in each of 
the writs., thereby compounding his claims fourfold. The total amount claimed 
Kl,027,530 is equivalent to over 10 years of furlough leave which could only be 
earned with 300 years of continuous service. Money in lieu of furlough leave 
accrual for 15 years of completed service to date is worth 6 months' salary or 
K50,000.00 (then). 

Paul Paraka Lawyers who acted for Mr Lupari claimed for and were paid 

K200, 000 as costs for each matter totalling K8 00.000 for the f our matters. 

In spite of the matter being setded so soon after Writs were filed for the full amounts 
claimed in each matter, Paul Paraka Lawyers filed an application for Taxation. The 
application was filed on the 03 rd of March 2003, the same day all four Deeds were 
signed. There is nothing to indicate that there was disagreement between plaintiff and 
defendant (State) over costs. 

The taxation of costs was dealt with promptly, a day after the application was filed. 
Mr. Eric Kiso issued a "Certificate of Taxation" stating that ... "the plaintiffs costs 
have been taxed and allowed at K200,000". Mr. Zachary Gelu had signed an 
"instrument of consent" on the 03 rd of March 2003 the same day that he signed the 
four Deeds of Setdement. 

The way this particular matter was supposedly taxed is peculiar indeed and the 
Commission finds that it was a charade to legitimise exce ssive costs. It was done so 
easily because the taxing officer was so incompetent he did not know what was asked 
of him and what taxation of costs was all about. 



515- 



14. EVIDENCE RECEIVED 

To date evidence has been received from the following witnesses and 
Organisations: 

• Ms. Margaret Elias - Secretary for DPM. 

She produced two thick bundles of documents that for the first time 

revealed the extent of deception carried out by the claimant and his 

lawyers. 

Mr. John Kali - DPM Deputy Secretary. 

He was responsible for advising the Secretary for DPM, particularly on matters 
related to the appointment and termination of departmental heads. In February 
2002 as Deputy Secretary for Policy he advised the then Secretary, the late Mr 
Tsiamalili, that Mr Lupari's claims were unlawful and without merit and that a 
vigorous defence should be mounted in the courts to defeat the claims, in view of 
the serious implications for integrity of the contract system and also the Financial 
consequences of the flow on effect 

Mr. Vagi as Acting Secretary for DPM wrote to the Attorney General, Mr Francis 
Damem and delivered Mr Tsiamalili's draft affidavit, which set out in great detail 
all the reasons for opposing the claims by Mr. Lupari. That letter to Mr Damem 
was very clear that he was to mount a vigorous defence against the four claims. 

Despite the instructions given to the Attorney General to have Mr Lupari's claims 

defended Mr. Kali said he learnt later that the claims were all settled out of Court 

by Mr. Zachary Gelu. 



Mr. Ian Augerea - produced four court files WS 88, 89, 90 and 91 of 

2003. 



516- 



Eric Kiso - Assistant Registrar for Mt. Hagen gave evidence of presiding over 
taxation of costs in which Mr. Gelu 'consented' to Paul Paraka lawyers claim of 
K200,000.00 per matter. He said that he approved the costs after he sighted the 
instrument consenting to the amount signed by Mr. Zachary Gelu. Mr. Kiso was 
not able to explain satisfactorily the question put to him that if the costs were 
agreed to then there was no need to go through the process of taxing costs. Mr. 
Kiso did agree in his evidence that he had very litde experience in matters of 
taxation and had no guidance whatsoever from any officer in the Court system. 
He said basically that he made up the rules as he went along. 

Mr. Zachary Gelu 

Mr. Gelu was the Solicitor General at the time Mr. Lupari's four claims were 
settied. He gave evidence of signing four (4) Deeds of Release for the four (4) 
claims based only on material provided by Paul Paraka lawyers. The Deeds were 
signed less than two months after the four claims were filed and on the day he 
was suspended from office. 

Mr. Gelu said that he never consulted the Department of Personnel Management 
to seek instructions. He said he was satisfied-on the material provided to him by 
Paul Paraka Lawyers that Mr. Lupari had a valid claim. He denied ever sighting 
previous instructions from the Department of Personnel Management. 

Mr. Gelu also agreed for K200,000.00 to be paid as legal fees for each matter. 
When asked if he thought the work put in (minimal) justified the costs he said 
yes. 



Mr. Francis Damem 



517- 



Mr. Francis Damem was the Secretary for Justice Department at the time Mr. 
Lupari's four claims were settled. He gave evidence on oath and confirmed that 
the Department of Personnel Management had written to him as Attorney 
General with instructions to defend the matters. He testified that he had passed 
this on to the Solicitor General's office. However he refused to accept that he had 
later signed a letter to Finance requesting payment on all four (4) Deeds of 
Settlement. 

Mr. Damem appeared with Mr. Paul Othas, a lawyer from Paraka lawyers when he 
gave evidence to the Commission. Mr. Othas did not say much but on at least one 
occasion handed written material to Mr. Damem while he was still giving evidence 
in the witness box without first obtaining permission from the Commissioner or 
consulting the Counsel Assisting. To this day Mr. Othas, has not apologised for 
his disrespect to the Commission of Inquiry. 

Mr. Guguna Garo 

Mr. Garo is a senior Associate with Paul Paraka Lawyers. He gave evidence that 
he drafted and filed the first lot of Writs WS 1788, 1789,1792 and 1793 of 2003. 
He emphasised right from the start that after the four claims were withdrawn the 
file was taken away from him and he had nothing further to do with the four 
claims until it seems the matters were investigated by the Commission of Inquiry. 
Throughout his evidence he was evasive about the conclusion of the four claims. 
When asked by the Commission he denied knowing even that the four claims had 
been settled for the full amount claimed in the court actions he had drafted. The 
Commission does not find Mr. Garo's evidence on this aspect to be credible. 

As to the merits of the claim itself, Mr. Garo placed great reliance on the case of 

Peter Aigilo when he was sacked as Commissioner of Police by the newly formed 

Morauta government. In evidence he avoided 

518 



commenting directly on whether Mr. Lupari had in fact suffered any loss in pay 
and entidements and the resultant stress, illness and embarrassment that Mr. 
Aigilo had sufferred. He did agree in evidence though that for at least one claim 
based on the contract of employment as Secretary for DPM there was no breach 
of contract because the contract specifically said that it had been varied. The 
Commission finds that Mr. Garo would have had full knowledge of the strength 
of all of Isaac Lupari's four claims from documents provided to draft the four 
court actions. In spite of his knowledge of the variation clause Mr. Garo still went 
ahead and filed the claim. This in itself is serious culpable conduct by a lawyer 
whose first duty is always to the Court. By filing the claim knowing it to be 
baseless, Mr. Garo deliberately and knowingly misled the court right from the 
start and this serious breach of duty is not remedied by his contention in evidence 
that it was up to the State Solicitors office to pick this out and use it to defend the 
State when the matter went to trial. 



Mr. Billy Bonner 



If the evidence of Mr. Bonner is to be believed, then he is the star in settling Mr. 
Lupari's four claims. It would seem that he was the person who drafted four 
quantum submissions that so convinced the Solicitor General' that Mr. Zachary 
Gelu agreed to sign four Deeds of Setdement within three days of receiving Billy 
Bonner's quantum submissions. The fly in the ointment though is the fact that 
Mr. Billy Bonner was not even a lawyer when he wrote the quantum submissions. 
Instead he was the file manager in the firm of Paul Paraka Lawyers with no legal 
qualifications whatsoever when he did such wondrous legal work. 



Mr. Billy Bonner testified that his principal Mr. Paul Paraka had given 
him the four claims and asked him to draft quantum submissions. 

519- 



Bonner could not explain why Mr. Paraka gave him, a file clerk, the four files 
worth millions to handle and not to one of the many lawyers that worked in the 
firm. Mr. Bonner said further that he did not consult any lawyer within the firm to 
see whether he was doing the right thing. 

Of great significance is the admission by Mr. Bonner that with his quantum 
submissions four draft Deeds of setdement were sent to Mr. Gelu as Solicitor 
General to consider. The evidence confirms the Paul Paraka Lawyers drafted and 
in so doing, dictated the terms of the Deeds even before the Solicitor General had 
received the quantum submissions. This evidence directiy contradicts Mr. Zachary 
Gelu's testimony that it was him who drafted the Deeds in Isaac Lupari's four 
claims. 

Right to the end of his sworn evidence Mr. Billy Bonner was a very evasive 
witness. He claimed to have a short memory and did not know what happened to 
the matter after he had sent off the quantum submissions to the State Solicitor's 
office. When pressed he finally admitted that he was present and had witnessed the 
signing of the Deed of Setdement by Mr. Zachary Gelu and Mr. Isaac Lupari. 

Mr. Isaac Lupari — Through his lawyer Paul Othas of Paraka lawyers handed up a 
bound volume of documents to GOI on 28 th November 2008. Contained among 
other papers 4 Deeds of Release which could not even be located at the Solicitor 
General's office.On 06/04/09 under great protestation handed up to COI five 
separate bound documents in response to Summons No. 327 dated 18 th March 
2009. 

Ms. Winnie Kiap- Former NEC Secretary. Assisted COI in trying to locate 
contracts of employment entered into by Mr. Lupari. 



520- 



PAYMENTS BY THE DEPARTMENT OF FINANCE. 



ffltroAmrt ChsMsNQtts Oedts 'tfeeriy 

tas HrtfiQAlHemf A ee [Ms Ty RfemB(Ffe4$(RyTBls TddRife 

1331320 747/C8 27 42014123 1261saBclifH) Trarapart-CSIAfCR OQ 63790 27.W7.19 

•QGV2IB96KBB 207 4301 4123 136teBcLpEri Rrtcfeorajfeny CQ 74257 12 A (11100 

12J2W SBDCB9 20? 43014123 135 IsaEcUpai OS&tftterot CQ 74KEI 1Z7/XQOO> 

Sta» 963037 480 310 OlfflfalipmFhtofeerfteTBls CQ76B0B3 8QCEQCD, 

WB30M 138 460 310 OtesEcLLpai Rrtfertraahdro CD 793168 1,00*000001,367,057.19 



According to the extract of payments shown above, taken from Department of Finance Cash 
Book, two payments made to Lupari was paid out of Trust fund suspense account. He was paid Kl 
million for breach of contract. The Commission does not know at this stage whether he has since 
been paid the balance of K2,703,461.31. 

D. FINDINGS 

(a) Claim - Liability and Quantum 

Cause of Action in Law 

• There was no termination of employment contract. In two of the 
contracts i.e., Finance and DPM there was no termination but only 
variation of contract. Therefore Mr. Lupari did not have a cause of 
action seeking damages for unlawful termination in those two contracts. 

Mr. Lupari did not suffer any loss to entitle him for damages. This is because for 
the whole time period that he claims for, he was on the Government pay roll 
earning the same and at times more pay than his usual salary and entitlements. 
His claim for damages therefore lacks foundation. 



Mr. Isaac Lupari knew full well that his claims amounted to triple 
and quadruple dipping. Yet he went ahead and instructed his 
lawyers to file claims against the State in the National Court. Even 

521- 



knowledge of the law Mr. Lupari would have known that he had suffered no loss 
and the money received from the claims would be a windfall. 

Mr. Guguna Garo o f Paul Paraka Lawyers filed th eJbu-r-^lairns"khowing ' that Mr. 
Lupari had suffered no loss. His J jcaons— gffiountedrTo willful misleading^of-a- 

GQurt-o f law and he fadedJ n-his-pa-mm&urrr^tEcal'duly 

as an officer of the Court. 

«" B **" 

Paul Paraka Lawyers drafted the four Deeds of Setdement in Isaac Lupari's four 
claims against the State. These four Deeds were sent to Zachary Gelu with the 
Quantum Submissions three days before Mr. Gelu signed the Deeds of Setdement. 

Quantum 

The total amount claimed is excessive and r.onstitiitesjmjnRt enrichment. On the 
face of it Mr. Lupari's claims (without special damages, costs and interests) are four 
times what his entitlements would normally be. 

Attorney-General & Solicitor-General 

Zachary Gelu as Solicitor General was recklessly negligent in not seeking 
instructions from the Department of Personnel Management before signing the 
four Deeds. 

There were detailed instructions on the Solicitor General's file that was ignored by 
Zachary Gelu when he signed the four Deeds of Settlement less than a month 
after the four court actions were filed. 



Non compliance with NEC directive NG 07/2002 by both Mr. Zachary 
Gelu as SG and Mr. Francis Damem as AG. 



522- 



COMPLIANCE ISSUES 

Public Finance (Management) Act 1995 

No Ministerial approval sought before DOR for amount far in excess of 
K100,000.00 prescribed under s.61 PF(M)A. 

Some payments were made out of Trust fund suspense account and not from 
"lawfully available funds". 

Claims By & Against the State Act 1996 

NEC Decisions 

Directive 10 of NEC Decision NG 07/2002 which specifically prohibited any 
further out of court setdements was ignored by Mr. Zachary Gelu when he 
signed the DOR on 28 th February 2005. 

Other Findings 

Mr. Lupari was not entitled to the K3,703,461.31, either legally or morally. 

Paul Paraka lawyers engaged in deceptive conduct when filing Writs in the order 

they did. 

The Solicitor General's file on Isaac Lupari's four claims against the State only 

contained 4 Writs filed in 2003. There were no correspondence, Instructions 

from DPM, Quantum submissions or other documentation. 



Paul Paraka Lawyers did not submit quantum submissions. Purported quantum 
submissions later produced to the Commission were fabricated after the Col 
summoned same from Mr. Guguna Garo of Paul Paraka Lawyers. 



523- 



• Mr. Zachary Gelu signed the four Deeds contrary to clear instructions 
by DPM to defend claims in court. 

If Gelu did not in fact sight the Instructions he failed to seek 
instructions himself from DPM. When he signed 4 Deeds he was in fact 
acting on material supplied by Isaac Lupari's lawyers. 

Mr. Zachary Gelu signed the four Deeds in haste very soon after the 
court actions were filed and on the day he was to be suspended from 
office. 

r • Paul Paraka lawyers were paid K200,000.00 for each matter totaling 

K800,000 for doing a minimal amount of work. That work consisted 

X 

only of drafting the four Writs of Summons. There were no appearances 

in Court and no protracted negotiations before agreement was reached 

to settie the four matters out of Court. 

j 

RECOMMENDATIONS 

4s Isaac Lupari is referred to the Fraud Squad for investigations with view to 

laying criminal charges for fraud. 

Isaac Lupari is referred to the Ombudsman Commission for investigations on 

whether he breached leadership code. 

Mr. Guguna Garo be referred to the Police fraud squad for investigations for 
part he played in lodging fraudulent claim on behalf of Lupari 
4s Mr. Guguna Garo is referred to the Lawyers Statutory Committee for further 
investigations. 
& Zachary Gelu is referred to Police fraud squad for conspiring with Paul Paraka 

Lawyers to facilitate a fraudulent claim. 
<4 Billy Bonner is declared as not a fit and proper person to be admitted to 
practise law. 



524- 



£ That in future, Deeds of Setdement should not be left to the discretion of one official like 
the Solicitor General or even the Secretary for Justice. Instead some oversight must be 
had by having both sign before the Deed can become legally binding on the State. 

«$■ Paul Paraka Lawyers be referred to law society for charging excessive fees of K200,000 
for doing very little work. 

«®i Further to the above, clear directions must be issued stating all necessary steps to be 
taken before a Deed of Settlement can even be contemplated. The very first and 
paramount consideration is that instructions are sought and received. If instructions are 
not forthcoming, the Solicitor General must consult with the Secretary to ascertain the 
next step. 



& A limit to the amount that the Solicitor General can sign on. Any amount over K50,000.00 
must go to the National Executive Council for approval. 

4» Court action is taken to have the 4 Deeds declared illegal or invalid as based on fraud. 

4s That amounts paid under Deeds of Release and Setdement be taxed by Internal Revenue 
Commission. 

Consequential Legislative Reform 

Attornej Generals Act to set out requirements needed to be taken before Deeds of 
Release and Settlement can be entered into. Provision must be made that AG and SG 
must agree before Deeds are executed. Where either disagrees, matter must be defended 
in Court. 

Public Service (Management) Act, 1 995. Amendments are made to clearly 

spell out that where contracts are varied and the officer takes up another job on 

525 



the same or higher pay and entitlements, he has no further legal right to claim 
for the balance of his/her old contracts). 

(e) Isidore Kaseng 

PARTIES: 

For the State: 

Department of Justice and Attorney General ('DJAG') 

Department of Finance (T)oF') 

Fly River Provincial Government (FRPG) 

Claimants: 
(a) Isidore Kaseng, Gonene Kurokuro, Charles Hesaboda, Ambrose Maleveka, Yoto 
Biaguni, Semai Atowai, Martin Semenabe, Philip Kaseng, Oburo Taruai, Bill Kirokim, 
Dina Gabo, Damoi Dai'i, Gariga Iakoe, Sali Subam, Aino Keiba, Kukinae Kukane, 
Banabas Uako, Diglus Fitfot, Nalaba Kanupa, Daniel Atmayok, Mainu Kaworo, Peter 
Mugudia, Roger Iwanekeile, George Badiam and Vincent Karo ('Claimants'). 

NATURE OF CLAIM: 

The claimants were former elected members of the Fly River Provincial-B 
Government, which was suspended by the National Executive Council and 
subsequendy abolished by the National Parliament through enactment of a new 
organic law on provincial governments. 

2. The claimants commenced proceedings (WS No. 1070 of 1998) in the National Court 

against the Acting Administrator of Department of Western province; Fly River 
Provincial Government; Secretary, Department of Provincial Affairs and the State 
('State parties') seeking damages for loss of entitlements and office, respectively. 



526- 



C. DOES THE MATTER FALL WITHIN THE TERMS OF REFERENCE 

On 18 March 1999, the claimants obtained default judgment against the State except 
the other defendants, one of whom was the Fly River Provincial Government, which 
had filed a defence denying liability. 

On 21 April 2004, Acting Solicitor General, Francis Kuvi, setded the claim on behalf 
of the State parties by a consent order. On 30 April 2004 and 7 May 2004, Powes 
Parkop Lawyers filed separate Certificates of Judgment each in the sum of K20.25 
million, totaling K40.5 million. 

On 10 April 2005, the National Court, upon application by the State, set aside the 
consent orders and both Certificates of Judgment. 

On 31 July 2007, the Supreme Court dismissed WS No. 1070 of 1998 for not 
disclosing any cause of action. 

No payment has been made by the Department of Finance (DoF 1 ). 

In the circumstances, this matter falls within Terms of Reference No. 2, 3, 4, 5; 8,10 
and 12^13 and 14. 

D. SOURCES OF INFORMATION AND DOCUMENTATION 

1. The brief comprises information obtained from all persons considered by the Commission 
as having an interest in the inquiry into this matter, in particular- 
Registry 

National Court original file referenced WS No. 1070 of 1998 
Supreme Court original file referenced SCA 85 of 2005 
Department of Justice & Attorney General - 



527- 



Solicitor General file 

Francis Kuvi, former Acting Solicitor General (iii) 
Claimants — 

(i) Evidence o f — 

o Gonene Kurokuro o 

Roger Iwaneke o 

Robert Hui 
The relevant transcripts of proceedings are provided with this Brief. 
The critical evidence given by each of these witnesses is discussed where relevant in the 
course of the findings (F) of this Brief. 

CHRONOLOGY OF EVENTS 

1992 

In 1 992, Claimants were elected into office in the Fly River Provincial Government. 

On 16 October 1992, National Executive Council suspended Fly River Provincial 
Government pursuant to Section 187(e) of the Constitution. The reason was for misuse of 
funds and misconduct. This was in accordance with the old Organic Law on Provincial 
Governments ('OLPG'). 



On 16 October 1994, National Executive Council lifted the suspension of Fly River 
Provincial Government. 



On or about 19 July 1995, the State through the National Parliament enacted the new Organic 
Law on Provincial Governments and Local Level Governments. Consequendy, the claimants 5 
respective offices were made redundant and abolished under the old OLPG. 



528- 



1998 

On 29 October 1998, Powes Parkop Lawyers filed a Writ of Summons endorsed with a 
statement of claim on behalf of the claimants. The claimants sought various declaratory relief 
together with a liquidated claim totaling K2,l 48,834.00. 

On 10 November 1998, Henaos Lawyers filed a Notice of Intention to Defend on behalf of 
the Fly River Provincial Government ('FRPG'). 

On 19 November 1998, Henaos Lawyers filed a Defence on behalf of the FRPG. 

On 20 November 1998, Acting Solicitor General filed a Notice of Intention to Defend on 
behalf of all the defendants ('State parties'). 

On 4 December 1998, the Provincial Legal Officer, Bubi Gamogab, filed a Notice of 
Intention to Defend on behalf of the Provincial Administrator, Department of Western 
Province. 



On 1 8 March 1 999, the National Court entered default judgment against all the State parties 
with damages to be assessed. 

2001 

On 16 February 2001, on application by the FRPG, the default judgment was varied as being 
entered against the State only. Hence, no judgment was entered against the three (3) other 
State parties. 

On 21 August 2001, the FRPG through Henaos Lawyers filed an Amended Defence in 
which the FRPG asserted that the claimants had been overpaid K788,988.58 constituting 
service leave, leave, loss of office, damages and interest 



529 



contrary to the Salaries & Remuneration Commission determinations. The FRPG also 
brought a cross-claim seeking recovery for that amount. 



On 16 December 2003, the Deputy Governor of Fly Provincial Government, Hon. John 
Malom MPA, wrote to Mr John Kumura to setde the claimant's claim at Kl 6,035.00. In the 
following year on 14 January 2004, the Governor of the FRPG, Hon. Bob Danaya wrote to 
their then lawyer, Henaos Lawyers, informing them of a termination of their services and the 
appointment of the Solicitor General as lawyers for the FRPG as well. A copy of this letter 
was issued to the Acting Solicitor General, John Kumura, and the Provincial Administrator, 
Nelson Hungrabos. 



On 4 February 2004, Hon. Bob Danaya wrote to the FRPG's in-house lawyer, Sinclair Gore, 
instructing him to liaise with Francis Kuvi of the Solicitor General's Office to setde the 
claimants' claim "in full and in a manner requested by the claimants". This letter was also 
copies to Francis Kuvi. In that same letter, Governor Danaya also said, "I endorse the 
submission by the claimant's lawyers to the office of Solicitor General" without mentioning 
any specific amount(s). 

Following those correspondence, the Court entered judgment by consent in the following 
terms on 21 April 2004: 



1. "That the Defendants settle the Plaintiffs' claim as between the Plaintiffs and the Second and 
Fourth Defendants. 

2. That by consent, interest, costs and CPI adjustments be included for the period 
30 th June 2003 to the date of agreement. 

3. That by consent, the Second and Fourth Defendants facilitates (sic) all documentation necessary 
to facilitate the immediate settlement of thejudgment debt in full. 



530- 



' debt be paid in full into the Plaintiffs Lanyers Trust Account to enable all the 
ffs creditors including legal and consultants costs and fees are satisfied before 
plaintiffs (sic) are paid. 
No order as to costs of motion. " 

No specific amount(s) in damages or otherwise, constituted part of these consent orders. It 
only endorsed an agreement between the parties to settle the claim. 

On 30 April 2004, the claimants' lawyers filed a Certificate of Judgment incorporating a sum 
of I<20,250,000 as the judgment debt. The certificate was duly endorsed by the Solicitor 
General. 

On 7 May 2004, the claimants' lawyers filed a second Certificate of Judgment which did not 
specify a liquidated amount and instead annexed to it a schedule which incorporated the sum 
of K20,250,200 as the judgment debt. The Solicitor general did not endorse this Certificate of 
Judgment unlike the previous one. 

On 22 September 2004, Posman Kua Aisi Lawyers filed a Notice of Change of Lawyers for 
the State. 

On 26 November 2004, the National Court, upon application by all the State parties through 
Posman Kua Aisi Lawyers, set aside both Certificates of Judgment dated 30 April 2004 and 7 
May 2004, respectively. The Court found that both Certificates of Judgment were defective 
and invalid because neither had a Kina sum judgment or order on which they could stand. 
The order by consent made 21 April 2004 did not include any specific order for a specific 
amount of money. Further, the latter Certificate of Judgment did not contain the Solicitor 
General's endorsement. 



2005 



531 



On 31 January 2005, a Notice of Change of Lawyers was filed by Paul Paraka Lawyers for the 
Secretary, Department of Provincial Affairs and the State, effective 6 October 2004. 

On 30 June 2005, the National Court set aside the Consent Orders dated 21 April 2004; 
Default Judgment made 18 March 1999; and Order varying Default Judgment made 16 
February 2001. Further, the State and another were granted leave to file their Defences within 
twenty-one (21) days. To the extent the Court found there was a cause of action disclosed, the 
State parties' application to dismiss the claim was refused. 

2007 

On 31 July 2007, the Supreme Court upheld the State's appeal from part of the National 
Court order made 30 June 2005 and dismissed the claim in the National Court (WS 1070 of 
1998) for not disclosing any cause of action. The Supreme Court found that the claimants 
were duly compensated as determined by the Salaries and Remuneration Commission. As to 
the claim for loss of office, the claimants had been paid six (6) months entitlements for loss of 
office in accordance with Section 122 of the OLPLLG. With respect to their claim for 
payment of allowances during the period of suspension, the claimants had received their basic 
salaries and were not entitled to all other allowances including house or vehicles, which were 
withdrawn immediately upon suspension. 

F. FINDINGS 

I. Liability In Issue 

(a) Non-compliance with Section 5 - Claims By and Against the State A.ct 
1996 

1. The Commission has examined the claimants' lawyers letter dated 12 October 1998 to the 
Solicitor General giving notice of their intention to make a claim against the FRPG and the 
State ('Notice of claim 5 ). 



532- 



The claimants' Notice of claim asserted that their cause of action accrued from October 1998 
when they were advised by the FRPG that their entidements would not be paid. 

However, the Commission finds that the Notice of claim did not disclose any cause of action 
for the reasons found by the Supreme Court. That is, the claimants were duly compensated 
as determined by the Salaries and Remuneration Commission. As to the claim for loss of 
office, the claimants had been paid six (6) months entitlements for loss of office in 
accordance with Section 122 of the OLPLLG. With respect to their claim for payment of 
allowances during the period of suspension, the claimants had received their basic salaries 
and were not entided to all other allowances including house or vehicles, which were 
withdrawn immediately upon suspension. All this information was available to the claimants, 
their lawyers and the Solicitor General at the time of giving the Notice of claim. 

Therefore, the Commission finds that the Notice of claim was invalid for purposes of 
Section 5 of the Claims By <<& Against the State Act 1996 ('Claims Act?) . 

In the circumstances, the claimants' claim under WS 1070 of 1998 was not enforceable as 
against the State for want of compliance with Section 5 of the Claims Act. 

(b) No merits nor reasonable cause of action disclosed against State 

The Commission finds that the statement of claim endorsed to WS 1070 of 1998 did not 
disclose any cause of action for the reasons found by the Supreme Court. That is, the 
claimants were duly compensated as determined by the Salaries and Remuneration 
Commission. As to the claim for loss of office, the claimants had been paid six (6) months 
entitlements for loss of office in accordance with Section 122 of the OLPLLG. With respect 
to their claim for payment of allowances during 



533- 



the period of suspension, the claimants had received their basic salaries and were not entided 
to all other allowances including house or vehicles, which were withdrawn immediately upon 
suspension. All this information was available to the claimants, their lawyers and the Solicitor 
General at the time of commencement of those proceedings. 

7. In the circumstances, the claimants' claim under WS 1070 of 1998 was not enforceable as 
against the State for failing to disclose any cause of action. 

(c) Cross-claim for recovery of overpayment - K788,988.58 

The Commission finds that FRPG's cross-claim against the claimants seeking recovery in the 
sum of K788,988.58 for over-payment was neither considered nor determined by both 
National Court and Supreme Courts. This was apart from the fact that the FRPG was not 
named as an appellant in the appeal nor heard by the Supreme Court at all. 

The payments made by the FRPG to the claimants for the period of their suspension 
consisted of entitlements (service leave, leave, loss of office, damages and interest). These 
entitlements were all withdrawn by determination of the SRDC upon the suspension of the 
FRPG. 

In the circumstances, the Commission recommends that the State take all steps necessary to 
pursue the cross-claim pursuant to the Amended Defence filed by FRPG through Henaos 
Lawyers on 21 August 2001. 

II. Assessment of damages 

The Commission has found that on 26 November 2004, the National Court, upon application 
by all the State parties through Posman Kua Aisi Lawyers, set aside both Certificates of 
Judgment dated 30 April 2004 and 7 May 2004, respectively. 



534- 



The Court had found that both Certificates of Judgment were defective and invalid because 
neither had a Kina sum judgment or order on which they could stand. The order by consent 
made 21 April 2004 did not include any specific order for a specific amount of money. 
Further, the latter Certificate of Judgment did not contain the Solicitor General's 
endorsement. 

II. Steps taken (or not taken) by Solicitor General in defence of the claim 

Although the National Court has set-aside the said Certificates of Judgment and Consent 
Orders, the Commission finds that there is ample evidence of serious failures on the part of 
the then Acting Solicitor-General, Mr Francis Kuvi in the performance of his professional 
duty as lawyer for the State. 

a. Processing of claim and Pay-out 

There has been no payment in respect of this matter. Further, no payment should be made in 
respect of this matter in view of the decision of the Supreme Court dismissing the claim in 
its entirety. 

G. RECOMMENDATIONS 

The Commission recommends that: 

Referral to the Lawyers Statutory Committee 

1. Francis Kuvi for dishounorable, improper and unprofessional behaviour in that he failed to 
conduct due diligence prior giving clearance to the Department of Finance clearing payment 
based on the said Consent Order and Certificates of Judgment 



Referral to the Secretary, Department of Finance 

535- 



2. Refuse any claim for payment regarding this matter 

3. Refer any such claims made to the Attorney General for advice 

Referral to the Attorney General 

4. Direct Solicitor General to take all steps necessary to pursue the cross-claim 

pursuant to the Amended Defence filed by FRPG through Henaos Lawyers on 21 
August 2001. 

5. Advise the Secretary, Department of Finance to refuse any claim for payment regarding this matter 



536- 



E. Procurement of Good and Services 

The Commission reported on five (5) matters that related to the alleged supply of goods and 
services to agencies of the State. The claims were pursued either in the National Court or through 
negotiated setdements with the Solicitor General. 



In a number of instances, the procurement processes as prescribed by the Public Finances . 
Act 1995 were completely ignored. It has become an obvious trend for the State agencies to enter 
into ad hoc arrangements in the procurement of goods and services without due regard of the 
prescribed procurement process. 

The Commission finds that there is immediate need for greater co-ordination between 
Departmental Heads and Department of Finance to ensure - 

y compliance with the rules on procurement 

A procurement occurs on there being funding available through budgetary appropriation 

y claims for payment are not lodged directly at Finance Department where procurement 

is by self-accounting departments or agencies of the State 
y payments by Finance Department are done in consultation with relevant heads of 

departments or agencies of the State 

the Tenders Boards do not exceed the limits of its financial delegation on contracts 

awarded 
y contracts are only awarded to suppliers with financial capacity, resources and 

experience 

the contract to supply is performed and payment is not based on pro forma or 

dummy invoices 



537- 



A there should never be payments in advance 
claims are authentic 

corrupt practices involving senior officers of the State are detected and dealt with 
decisively. 

In defence of claims against the State, the Commission finds there was- 

Gross failure by Solicitor General to effectively seek instructions 
y Failure by departmental heads to provide instructions to Solicitor General within time, 
or at all 

Despite the comprehensive and widely recognized processes, the Solicitor General and Department 
of Finance failed to consult the relevant heads of Departments and State agencies when considering 
the authenticity, price and payment of the claims. This was the trend in all matters investigated. These 
are all in addition to the other defences identified in each report. 

The Commission finds that certain Solicitors General have been grossly negligent in protecting the 
State's interests. 

The Commission recommends the following: 

Review composition of tenders board and its operations to ensure compliance with 

Public Finances (Management) Act 1995 

Investigation and prosecution of officers implicated 

Investigation and prosecution of officers who have failed to comply with requests 

(investigations) and recommendations of Auditor General 



538- 



(a) Pacific Paradise Corporation Ltd 

Pacific Paradise Corporation (PPQ a company owned by Mr. Tom Rangip, was paid a total 
Kl 4,850,1 05.97. PPC claimed that the State had not paid for food it supplied to PNGDF 
soldiers based at all Military barracks around the country. The company had previously 
tendered for and was awarded contracts to supply food to the PNGDF in the years 1996 and 
1997. 

The claim by PPC was among several claims which were being pursued against the State for 

alleged wrongs done by the PNG Defence Force and Department of 
Defence. Among those claims was one claiming compensation fo r the burning 



down of the Germania club by soldiers in 1993. Other claimants including PPC sought 
payment for supply of goods and services. In December 1998 the Prime Minister Honourable 
Mr. Bill Skate, directed the Auditor General and the Attorney General to investigate the 
various claims. Both officials were directed not to make any settlements until each and every 
claim was verified as authentic. 

Evidence gathered so far by the COI indicate that PPC's claim for the supply of food to the 
PNGDF was fraudulent in nature based on falsified invoices. Goods claimed as supplied were 
either not supplied at all or was short supplied. A report done after investigation conducted by 
the Financial Inspection Services division of the Department of Treasury and Planning (as it 
was then) summarised its findings as follows: 

1 . Rules on tender procedures, consideration of tenders and on awarding of contract were not 
followed. 



539- 



The Defence Tenders Board exceeded the limits of its financial delegation on contracts 
awarded between 1996 and 1997. 

Twice, PPC was awarded supply contracts although it had no financial capacity, facilities 
and experience in servicing large volume of transactions 

Most payments to PPC appear to have been fraudulent, based on fictitious supplies 

Goods covered by K5,390,855.99 outstanding claim under 9 invoices endorsed by James 
Melegepa appear not to have been supplied 

Most payments to PPC were based on proforma or dummy invoices 

PPC dealings in supply of foodstuff toPNGDF characterized by advance payments, overs; 

There are clear suggestions of corrupt practices done in connivance with senior officers of 
the Department (of Defence) and the Force. 

The 1 996 board failed to determine that PPC had a managing director Tom Rangip who 
had been declared insolvent on 27 th October 1995 by the National Court. 

• An Audit Report compiled by the Auditor General's office in 1999 also found gross 
irregularities and concluded that: 1. K7, 597,782. 16 worth of invoices was under 
dispute 



540- 



K481,351.55 worth of food arose from 7 containers of food supplied to troops of 
Bougainville. These goods were not accepted by PNGDF because the order had 
previously been cancelled, in fact 4 days after it had been made. It was also noted 
that quantities in the invoice materially differed from details of suspended order. 

Only K260,000.00 was confirmed as being due and owing to PPC 

The rest of the claims could not be established as in order because of the absence 
of documentation in respect of ordering, receipting of foods or other 
corroborative evidence thereof. 

After receiving both of the above Reports Mr. Michael Gene the Attorney General 
then briefed the matter out to Mr. Moses Murray of Murray and Associate Lawyers. 
In his advice to the Attorney General Mr. Murray advised that the State was liable in 
relation to several containers of food held at the Port Moresby and Rabaul Wharves. 
The food was supplied under the 1997 contract and had been sitting at the Wharf 
until the year 2000 when Mr. Murray advised that even if there was oversupply the 
State was still liable to pay. In evidence Mr. Gene conceded that after the long period 
of time most of the food had gone bad, but the State still had to pay. 

Based on the above advise a Deed of Settlement (DOS) for the sum of K5, 125, 183. 00 
was signed on 02 nd May 2000 by Mr. Michael Gene on behalf of the State. Soon after 
he executed the Deed Mr. Gene was replaced as Attorney General. His successor Mr. 
Sao Gabi (now Hon. Justice Gabi) questioned the validity of the claim and fired Mr. 
Murray as lawyer and instructed Warner Shand Lawyers to instigate recovery action. 



541- 



When request was made to Finance dept to pay out on the Deed of settlement it 
refused saying that the claim was partly bogus. To enforce the agreement reached in 
the Deed, lawyers for PPC filed Writ, WS 862 of 2000 on the 17 th July 2000. It 
claimed the amount that had already been awarded in the DOS of 02 nd May. 

The Writ was filed on the 1 8 th July 2000. At the same time a Notice of motion was 
filed seeking to enter Summary judgment. The returnable date was the next day 19 th 
July 2000. Negotiations were entered into and Mr. Toop agreed to forego 
K656, 122.87 which the Finance dept claimed to be fraudulent. On the 09 th of August 
2000 Mr. Murray who was acting for the State consented to a Court order for the sum 
ofK4,469,060.13. 

Mr. Toop still managed to get the K656, 122.87. He filed separate motion and on 06 th 
April 2001 "consent default judgment" was obtained for the payment of I- 
C656,122.87. 

Further to the above two payments consent order was endorsed by the National 
Court on the 11 th of September 2002 for the State to pay the interest component on 
the principal sum of K5,l 25,1 38.00. Interest .was awarded in the sum of 
K2,405,392.27. 

On the 10 th of August 2000, WS 1032 of 2000 was filed claiming K4,981, 580.35 for 
non-payment of sums owing under various other invoices which were not specifically 
mentioned in the Deed. This appears to be in breach of the agreement reached in the 
Deed of Settlement of 02 nd May 2000 whereby it was agreed that the State would pay a 
total of K5, 125, 183 in full and final setdement of its claims in relation to the claims 
for food supplied to the PNGDF. 



542- 



PPC pleaded in WS 1032/00 that it had previously won a tender in 1996 to supply 
food to various Army barracks throughout PNG. On 19 th November 2001 the 
Solicitor General consented to a court order for K4,981, 580.35 to be paid by the 
State. 

Another consent order was obtained on 11 September 2002 for the State to pay 
Interest of K2,337,995.35 and K150,000.00 in costs. 

It seems that Tom Rangip, owner of PPC is not done yet with the State. On the 26 th 
June 2006 Habuka lawyers filed Writ WS 896 of 2006 claiming a total K 25.75 million 
broken up into the following heads of damages. 

K3.25 million for loss of contract with PNGDF for further 5 years K15 million 
for loss of contract with National Disaster Authority K 7 million for "loss of possible 
other contracts". WS 896 has not been determined yet. The Director of National 
Disaster Center (not "Authority") has advised the Commission of Inquiry that the 
NDC never entered into a contract with PPC to supply food. 

This Report was sent to the Attorney General, Mr. Michael Gene who summarized 
the Audit report in the following terms. "The audit report quite unequivocally raise 
serious issues on the authenticity of the various invoices because of the following 
reasons: 

Inability of the officers of the PNGDF to provide relevant invoices/documents, 
Accounting system and record keeping maintained at Murray Barracks were not 
up to expected standards, 

In the majority of instances the placements of orders were not in writing. Receipt 
of stock records maintained in Murray Barracks did not, in many instances, show 
receipt of goods, and 



543- 



There was complete lack of compliance and respect for law in the procurement 
and engagement of suppliers for service." 

Mr. Gene concluded that with respect to liability, his advise was that the State was not 
liable to pay. Mr. Gene did go on to say that ... "I require further and better instruction 
and documents to formulate a firm view. 

Mr. Gene next briefed Mr. Moses Murray of Murray and Associates to handle the 
matter on behalf of the State. Mr. Murray advised that although there were no legal 
contracts and in some instances there was over-supply of food, the State was still 
liable on a Quantum Meriut basis. According to statements provided to the COI by 
Mr. Murray, Gregory Toop, lawyer for PPC got wind of this advise and called Mr. 
Murray. 

Negotiations were entered into with Toop asking for amounts as high as I<18 Million 
and not less than K12 Million. According to Mr. Toop in a statement he provided to 
the COI, he wasked for K13 Million because ... "it was as good a figure as any to start 
with". Finally an amount of K5, 125, 187. 97 was agreed upon and Mr. Murray drafted 
the Deed which Mr. Gene and Mr. Toop signed on 02 nd May 20000. 

Cash book extracts show that a sum of Kl 4,850,1 05.97 has already been paid out to 
PPC. 



544- 



(b) Pacific Engineering Ltd - Defence Force 

Parties 

For the State: 

(a) Attorney-General & Solicitor -General 

For the Claimant: 

(a) Pacific Engineering & Repairs 

Others (if any) 

Directorate of Supply, PNGDF 
Secretary, Department of Defence 

Department of Finance 
Terms of Reference ("TOR") 

The applicable reference concerning this claim is TOR 2, 3, and 4. 

Documents and investigations conducted at: 

The documents the subject of review and examination are File No. SG 151/04 
(Office of the Solicitor General/ Attorney General) and, Writ of Summons No. 309 of 
2004 (National Court Civil Registry) 

Attorney-General (AG) 

Solicitor-General (SG) 

Department of Finance (FD) 



545- 



The Matter 



This claim relates to unpaid invoices for spare parts, repairs and maintenance of military 
vehicles and equipment numbering a total of 64 claims in 2003. The unpaid invoices 
amounted to a total sum of Kl, 456,700.00. The Plaintiff Company instructed Warner Shand 
Lawyers to institute proceedings against the State for the unpaid invoices on 25 th March 2004. 

Warner Shand lawyers gave section 5 notice pursuant to the Claims By and Against the State Act 
1996. In the same letter dated 10 th February 2004 extension for time to file a claim was also 
sought from the Solicitor General. The Solicitor General and the action officer failed to 
respond to the request for extent time to file a claim against the State. 

Following that letter, the Writ of Summons was filed on 25 th March 2004 and named the 
Independent State of PNG as the Defendant. The writ does not name the Secretary, 
Department of Defence or the Commander of PNGDF. In the Statement of Claim, the 
Plaintiff claims non payment of repairs and maintenance of defence force vehicles and 
equipment for the unspecified dates on the invoices for the total amount of Kl,456,700.00 
plus interest and costs of the proceedings 

Despite numerous correspondence to the Solicitor General over the proceedings, the Court 
made orders pursuant to section 5(2) (c)(ii) of the Claims By and Against the State Act 1996 
confirming the section 5 notice and the extension for time to file the claim. That order was 
made on 26 th August, 2004. 

The National Court file reveals that the State had not filed any Notice Of Intention to Defend 
nor any Defence. The Plaintiff obtained default judgment against the State on 25 th August 
2004. The Court made orders in favor of the Plaintiff for the sum of Kl, 456,700.00 and 
interest on that sum accruing at the rate of 8% per annum from 25 th March 2004 until 
payment. 



546- 



6 Certificate of Judgment pursuant to subsection 13(2) of the CBASA Actwas filed 

by the Plaintiff on 30 th August 2004 basically certifying that the Plaintiff obtained 
default judgment in the sum of Kl ,456,700.00 and interest plus costs 

The Court file notations indicate that at the court hearings relating to applications 
for default judgment, Mr. Mundua Kua failed to attend the hearings at Court and 
no explanations were provided. 

On 29 th November 2004, Paul Paraka Lawyers were instructed to act for the State 
and provide a review on the proceedings. 

With regard to the payments arising out of the judgment order of 1 8 th August 
2004, it is important to take note of the concerns raised by the current acting 
Solicitor General. His concerns were directed to the Secretary of Defence dated 
27 th February 2008 and one which summarizes the state of affairs concerning the 
judgment order. The letter reads; 



I advise the Plaintiff in this case obtained a default judgment (copy attached) on the W h 
August 2004 in the liquidated sum of K1AS6. 760. 00 . Since the date of the order to date, 
my record shows that no payment has been done on this judgment. 

I have noted this mth great concern that if no payments are done on this judgment t date, the 
interest will accumulate to over K400.000.00 

I have inquired at the Department of Finance but their records also indicated the same. 

Please cause an investigation into this issue and advise as to whether this judgment has 
' been settled by your Department. " 



547- 



10. Mr. John Liu the Company Secretary, Pacific Engineering & Repairs Ltd confirmed with the 
Commission that no payments have been made with respect to the default judgment since 
25 th August, 2004 (Refer to FD"24") 

REVIEW OF MATERIALS RELATED TO THE CLAIM 

The Commission commenced hearings and the calling of evidence and materials with regard to this 
claim on 6 th October 2008. During that period a number of persons were summonsed and appeared 
personally or have provided statements and other documents to assist with our inquiry. Based on the 
evidence and materials that have been provided, the following observations and findings reflect the 
general evidence that was availed to the Commission for its assessment with respect to the TOR. 

NON COMPLIANCE WITH STATUTORY PROCUREMENT PROCESS 

The Commissions observation with regard to this claim is the fundamental disregard of the 
procurement process lawfully provided for under Public Finances (Management) Act 

There was a breach of the procurement process by the Papua New Guinea Defence Forces either 
through 'absolute disregard' or 'the short cut' mentality to procure goods and services. The 
explanation that the PNGDF provided to the Commission was the urgency to ensure that the 
vehicles were maintained as a result of the Bougainville Crisis. 

The Commission's collective view is that the Bougainville Crisis required the presence of PNGDF 
personnel, vehicles and equipment on Bougainville. The magnitude of the civil conflict was such that 
the appropriate course for the PNGDF to take in procuring services was to comply with the 
procurement process under the Public Finances (Management) Act, 1996. The procurement process 
provides for value for money, transparency, effective competition, fair and ethical dealing and efficiency and effectivenesses 
fundamental to good governance, financial discipline and accountability. 

21 Refer to Part 11-Procurement-Framework and Principles, Financial Management Manual 



548- 



Assessment of the Evidence (Sworn Testimony and Documents) 
Witnesses 

The following persons gave evidence on oath; • 

Mr. John Liu 

(Corporate Secretary of Pacific Engineering and Repairs Limited) 

Assisted the Inquiry by his attendance and informed the Commission that PNGDF had not 
settied the default judgment. By the same token, the Solicitor General had not issued a 
Certificate of Judgment which was outstanding for almost 4 years. 
(Transcript of Proceedings COIFINANCE 13 th October 2008 at pp 879 to 882) 

Further to that appearance on 13 th October 2008, Mr. Liu provided farther information to the 

Commission on the status of the payment/settlement of judgment. 

"The outstanding were incurred from in or about 1997 to 2002for repairs I maintenance of motor vehicles 
and supply of spare parts to the PNGDF. Most of them related to the Bougainville Crisis, and the reason 
that was given by PNGDF for not settling the debt was that during that period they were having cashflow 



It is our understanding that two internal audits and one external audit were carried out to verify the 
outstanding debt. 

As of today, we still have not received the amount nor the interest payments from the State despite numerous 
correspondences and meetings with the Department of Defence, Department 



549- 



of Treasury, Department of Finance, Department of Justice and Attorney General and ourselv es (Pacific 
Engineering and Repairs hid) . "(My addition) (Refer to Document No. PER "25") 

On 19 th November 2008, he provided to the COI a bundle of documents under the heading 
"Outstanding Owing by PNGDF' which is the break-up of all the invoices relating to the 
Court Proceedings. Those payments remain outstanding and no paid by the Department of 
Defence. (Refer to Document No. PER "26") 

• Mr. Mundua Kua 

(Former Senior hegal Officer-Solicitor General's Office) 

Mr. Kua gave evidence that he was assigned with the file concerning the claim against the 
PNG Defence Force. The Court records indicated that no State Lawyers (especially the 
action officer assigned with the file) was present at the time default judgment was entered 
against the State and despite the lack of attention given to the application for default 
judgment at the Office of the Solicitor General, Mr. Kua was adamant that he had not 
sighted any of the documents hence his absence at the hearings. Mr. Kua however gave 
evidence that "lawyers were at fault., .not appealing or taking any measures to review the 
summary judgment or default judgment "[as required under section 12 of CBASActJ 

He also expressed his views on the procedures involved in the management of files, the 
legislation dealing with claims against the State and the procurement issue. 
He also expressed concern that the court had allowed the application for Section 5 notices 
and extension of time to be granted despite objections raised by Mr. Kua. He had advised 
Mr. Kuvi to appeal against the decisions but there 



550- 



was no action taken. There are also no file notes on this recommendation noted 
by the Commission on the SG records. 

He also denied that he had sighted Mr. Kuvi's memo to him directing him to provide an 
explanation on why a default judgment was entered for K1.2million against the State. 
(Transcript of Proceedings COIFINANCE 32 dated 13 th October 2008 (pages 879 
to 884; and COIFINANCE 60 dated 27 th January 2009 at pages 1452 to 1461 
especially page 1459 and Document Reference MK"27") 

• Mr. Francis Kuvi 

(Acting Solicitor General (Suspended)-Solicitor General's Office) 

He said in evidence that he had no authority to discipline Mr. Kua and by that time Mr. 

Kua had not turned to work at the Office until his resignation letter was submitted to the 

Department sometime in early 2005. 

(Transcript of Proceedings COIFINANCE 28 th January 2009-pages 1527 to 1530) 

STATEMENT AND PRODUCTION OF DOCUMENTS 

These are witnesses summonsed and produced statement and documents to assist the 
Commission in its inquiry into the claim. 

> Lieutenant Colonel Joseph Ben DMS 

He was the then Director of Transport. PNGDF HQ, and provided by way of a 
written statement dated 10 th October 2008 with the following explanation. 



551- 



The claims originated from audited outstanding accumulative bills for services 
rendered to the PNGDF by PER over a number of years. 
He confirmed that no legal contract existed between PER and Defence which 
was a direct contravention and non compliance with PFMA Act 1996 

'The said claims are accumulative claims incurred by PNGDF over a period ojtime, and 
not a one- of/payment for services rendered. Should, this be the case PNGDF would have 
followed the public tenderingprocess and procedures as required by law". 

The reasons why PNGDF entered into the "open credit facility arrangement with 
Pacific Engineering & Repairs Ltd 

"In early 2003 the Acting Defence Secretary intervened by setting up an audit team to audit all 
outstanding claims for service rendered to the Defence Organisation (DO). This intervention was 
to ensure that Finance Department pay genuine claims for services rendered to DO. The 
creation of the Defence audit team was sanctioned iy the then Defence Minister (Mr. Mathew 
Gubag). It took the audit team approximately eight months to audit hundreds of claims for 
services rendered ly our known clients, inclusive of Pacific Engineering <&° Repairs Timited. 
All audited claims were approved and forwarded to the Department of Finance fopayment in 
December 2003. 

The audit team discovered that the PNGDF committed Pacific Engineering and Repairs 
Umited hence has failed to honour its part of the arrangement thus allowing the accumulation of 
outstanding bills. 

The audit team confirmed that the arrangement between the DO and the said client was on an 
ad-hoc basis, which basically means an open credit facility. All invoices audited did not exceed 
the amount ofKWO, 000.00 which requires a formal contract. 



552- 



During the audit it was discovered that the most services rendered was in support of the 
PNGDF vehiclefleet of approximately seventy (70) vehicles in Bougainville during the crisis 
and the maintenance of the Port Moresby unit's vehicles over a period of time. 

The audit team identified that there were couple of reasons as to why 
PNGDF committed Pacific Engineering <& Repairs Limited to supply 
vehicle parts and accessories and or repair of PNGDF vehicles on a credit 
facility arrangement: 

Urgent demands for vehicle parts from the 'Bougainville Operations 

during the crisis; 

PNGDF did not have the funds at the time of these urgent 

demands; 

Value for Money (as oppose to genuine parts supplied by other 

motor dealers); 

Existing understanding with the supplier to supply render services 

based on priority demands due to DO financial constraints; and 

The willingness by the supplier to render services to PNGDF in 

credit. 
In conclusion, the audit team recommended that Finance Department settle the outstanding 
bills owed to their clients, inclusive of Pacific Engineering and Repairs Umited. I believe to date 
Finance Department has not settled the said claim which is now before the Commission of 
Inquiry. 



(Refer to Document No. "OD25") 



Findings 



553- 



From the evidence received by die Commission, the findings are as follows :- 

Solicitor General & Attorney General 

(Claims by and Against the State Act <& Attorney Generals Act) 

Section 5 notice given with request for the grant of extention of time to file claim against 

the State. 

The Solicitor General failed to respond to the request for extention of time. 

The Solicitor General failed to file the 'Notice of Intention to defend' the proceedings 

including the 'Defence' on time. 

The State had sufficient ground to defend and challenge the claim 
The claim was out of time by more than 2 years 

PNGDF was not named as the Defendant and therefore the Statement of 
Claim was defective having named the State as the only defendant The 
Statement of Claim related to the unpaid invoices accumulated over a period 
of 6-12 months against the PNGDF and not the State. 

The Solicitor General failed to challenge the application for default judgment on the basis 

of section 12 of the CBS A Act, 

The Solicitor General failed to file an appeal against the order for default judgment on the 

basis of section 12 of the CBSAAct. 

The Solicitor General failed to consult and obtain instructions from the Department of 

Defence with the view of settling the claim. That failure to settle the payment has now 

costs the State to settle the liabilities including interest accruing and costs. 

Papua New Guinea Defence Force 

The PNGDF and Department of Defence ad hoc arrangement with the Pacific 
Engineering & Repairs Limited on the open credit facility has allowed for the 



554- 



debts to accumulate over a period of time culminating in a huge liability on the State to 

settle the debt. 

The ad hoc arrangement created a huge burden on the PNGDF Budget given the fact 

that the arrears have now affected the appropriations for the following years. 

The PNGDF failed to comply with the Procurement process under the Public Finances 

(Management) Act, 1996. 



Recommendations 



The Solicitor General to take appropriate measures to review and file an appeal to the 

Supreme Court against the default judgment pursuant to Section 12 (3) of the Claims by 

and Against the State Act, 1996. 

The Department of Defence/PNGDF failed to comply with procurement procedures by 

calling for public tenders in the procurement of goods and services. 

The ad hoc open credit facility arrangement with the Pacific Engineering & Repairs 

Limited provided an avenue for abuse and was not in the best interest of the State. The 

crisis on Bougainville Island was in our view sufficient reason for the PNGDF to call for 

public tender for the provision of a service provider in the maintenance, repairs and spare 

parts for PNGDF vehicles and equipment. 

Mr. Mundua Kua was in our view negligent with regard to the management of the case at 

the time he was assigned, with the file. The claim involved a substantial amount of Kl, 

456, 700 and he failed to undertake all necessary research to ensure that the claim was 

properly tested in court. 

Mr. Francis Kuvi as the then acting Solicitor General failed to file an appeal against 

default judgment despite the lack of explanation from Mr. Kua who absconded from 

duties after the default judgment was entered by the Court against the State. 



555- 



► There is a need to ensure that the key positions within the Department of Justice are 
approved and filled by competent lawyers. The continuous 

and long delays in the appointment of Lawyers on acting capacity has created an 
uncertainty in decision making, discipline, proper instructions and re-organization of the 
Office to deal with the volume of work. 



556- 



(c) Pacific Engineering Ltd - Police Department 

PARTIES 

For the State: 

(b) Attorney-General & Solicitor — General 

For the Claimant 

(b) Pacific Engineering & Repairs 

Others (if any) 

(a) Office of the Commissioner of Police Terms of Reference 

("TOR") 

The applicable Terms of Reference are TOR 2, 3, and 4. 

Documents and investigations conducted at: 

The documents the subject of review and examination are File No. SG 151/04 (Office of the 
Solicitor General/Attorney General) and, Writ of Summons No. 307 of 2004 (National 
Court Civil Registry) 

Attorney-General (AG) 
Solicitor-General (SG) 
Department of Finance 

Relevant Facts: • 
The Matter 



557- 



The Claimant claims that between May to December 2002 at the request of the Defendant 
the Plaintiff carried out repairs and maintenance to vehicles belonging to the Royal PNG 
Constabulary. The Claimant made numerous representations to the Commissioner for Police 
demanding payment of the debts. The unpaid invoices between May to December 2002 
totaled K2,074,l 69.64. The claims under this Writ are for the unpaid invoices, interest and 
costs of the proceedings. (Refer to OD"3" and NC"4") 

Payments by Finance 

To verify with Department of Finance as to payments. There is a letter from the acting 
Solicitor General Mr. Devette who has expressed concern about the payments on the default 
judgment which has not been setded by the Department [Refer to SG"19"] 

Below is a schedule of payments made to Pacific Engineering and Repairs Ltd as derived 
from the Cash Book for periods 1 January 2000 and 1 st July 2006. 



558 



23-t2-20Wi 


14055 


207 


4201 


4123 


135iPacB)c Enqineeifn 


1 0/S aireare ICQ 




799848! 


269,942.71 


nfiSEi 


stun 


2074 


201 


2101 


135jPacHic Enginserin 


IPolice ICQ 




669611! 


241 ,767.63 


_#BM21 


811421 


2074 


201 


2101 


1 35 1 Pacific Enginserin 


Police ICQ 




6696111 


223,320,05 


12/31/2001 


811270 


2074 


201 


2101 


1 35lPacific£ngineerin 


'Pol O/S payment 


CQ 


668912! 


169,971.69 


811422 


2074 


201 


2101 


135lPacific Engineerin 


j Police ICQ 




669611! 


147,322.82 


•1/1/20021 


811424 


2074 


201 


2101 


135| Pacific Engineerin 


IPolice 


CQ 


66961 r 




147,210.71 


W2002! 


811423 


2074 


201 


2101 


135jPaci6c Engineerin 


j Police 1 


CQ 


669611 




114,464.12 


aouzoo 
i 


811284 


2074 


201 


2101 


135lPacic Engineerin 


Pol O/S payment 


CQ 


668912 




59,84633 


12/31/2001 
] 


811269 


2074 


201 


2101 


1 35 1 Pacifc Engineerin 


jPol O/S payment ;CQ 




668912 




95,499.94 


mom 


811419 


2074 


201 


2101 


135jPacific Engineerin 


(Police 


CQ 


669611 




92,188.52 


-002 1 


813800 


2074 


201 


2101 


135jPacBic Engineerin 


jPolO/S 


CQ 


670455 




82,590.59 


1281/20011 


811275 


2074 


201 


2101 


1351 Pacific Engineerin 


jPol O/S payment 


CQ 


668914 




80,566.55 


1/1/2002) 


811420 


2074 


201 


2101 


135jPacific Engineerin 


iPolice 


CQ 


£6961 1 




70,891.71 


Yi/24/200 



740365 


207 


4201 


4123 


135|Padc Engineerin 


IPoBce-ofslm.829 


CQ 


634126 




70,845.56 


lawoil 


811274 


2074 


201 


2101 


135iPaclc Engineerin 


[Pol O/S payment iCQ 




668914 




63,703.27 


n>mn> 


740367 


207 


4201 


4123 


135jPacific Engineerin 


iPolice-o/s lnv.843 


CQ 


634566 




58,709.46 


®1/2001i 


811266 


2074 


201 


2101 


1 35 1 Pacific Engineerin 


fPol O/S payment 


CQ 


668912 




54,362.88 


'oswomi 


811277 


2074 


201 


2101 


135jPacic Engineerin 


1 Pol O/S payment 


CQ 


668914 




54,310.46 


iuHflSoj 


7403631 


207 


4201 


4123 


135lPacific Engineerin 


IPoiice - o/s Inv. 19 


CQ 


634126 




54,001.83 


12/310T1; 


811276 


2074 


201 


2101 


135]Pacffic Engineerin 


IPol O/S payment 


CQ 


668914 




53,554,35 


23-12-5004 


13628 


207 


4201 


4123 


135iPacific Engineerin 


lO/SAneaisPmt{M 


CQ 


79898T 




48,314.88 


tifiOOO 


iris? 


207 


4201 


4123 


135[Pacific Engineerin 


IwCD Pol.O/S Invoices 


CQ 


631746 




47,879.21 


1182002 


813849 


2074 


r 201 


2101 


135IPaciftc Enginserin 


iPolO/S 


CQ 


670455 




46,849.14 


I vff ioof 


811426 


2074 


201 


2101 


135jPacfc Engineerin 


IPoBce 


CQ 


669611 




43,705.27 


11/4/2000 


735622 


207 


4201 


4123 


135!Pacific Engineerin 


iPOl-O/S Pymnts for 1 ;CQ 




631746 




43,50576} 


11/4/2000) 


735648 


207 


4201 


4123 


13SjPacrfic Engineerin 


iPOLO/SClaims fori 


CQ 


631746 




42.263.3ol 


"21-12-2004 


13634 


207 


4201 


4123 


135]Pacific Engineerin 


I Pmt for O/S invoices ICQ 




798732 




40,525.15! 


12/31/2001 


811271 


2074 


201 


2101 


135iPacific Engineerin 


(Pol O/S payment 


CQ 


668912 




40,162.98 i 


! lifl/2000 


735653 


207 


4201 


4123 


1 35 1 Pacffic Engineerin 


jNCD Pol.O/S Invoices 


CQ 


631746 


40,146.67 


I! 

1 /4/2000* 


735638 


207 


4201 


4123 


135jPacific Engineerin 


jPOl-O/S Pymnts in 19 


CQ 


631746 




39,588.45 


1 

twcooo 


735639 


207 


4201 


4123 


135'Pacific Engineerin 


iPOl-O/S Pymnts in 19 


CQ 


631746 




39,154.39] 


i lifl/2000 


735654 


207 


4201 


4123 


13SjPacific Engineerin 


iNCD-Pol.O/S Invoices 


CQ 


631746 




38,283.48 


12/31/2001 


811285 


2074 


201 


2101 


1 35 1 Padlic Engineerin 


iPol O/S payment 


CQ 


668912 




37,198.61 


i 11/4/2000 


735661 


207 


4201 


4123 


135!PaciSc Engineerin 


)NCO-P01:O/s Invoices 


CQ 


631746 




33,495.82 


12/31/2001 


811287 


12074 


20? 


2101 


135!Pacific Engineerin 


IPOl O/S Payment 


CQ 


668912 




33,232-99 


11/4/2000 


735662 


1207 


4201 


4123 


135|Paclc Enginserin 


IMCD-Pol O/S Invoices 


CQ 


631746 




33,056.50 


11/4/2000 


735664 


207 


4201 


4123 


1 35 1 Pacific Engineerin 


jMCD-Pol:0/S Invoices 


CQ 


631746 




27,597.10 


lf/» ChrSft 5 6l 


°gT 


4201 


4123 


135jPacific Engineerin 


iNCD-Pol'.O/S Invoices 


CQ 


631746 




27,562.77 


23-12-2004 


13S31 


207 


4201 


4123 


1 35 1 Pacific Engineerin 


[O/S Arrears Pmt (Def 


CQ 


798987 




27,104.63 


11/4/2000 


735650 


207 


4201 


4123 


1 35 1 Pacific Engineerin 


lPol:0/S Invoices for 


CQ 


631746 




26,450.25 


1V4/2O0O 


735657 


20 


4201 


4123 


13S!Pacffic Engineerin 


INCO-P0l:0/Sldwmcbs 


CQ 


631746 




25,828.16 


25j2*20bSl 


lOVsiEe 


bruaoy 


20(Ms} 


MrdtB 


ill btmp^dsfermatnet dj^aiaao^ass^ers actir 


igon 


798856 




20,429.32 


1 1®2002 


813339 


2074 


201 


2101 


135jPacific Enginering 


jPOUCE-O/S Arrears p 


CQ 


670138 




57,803.24 


112/31/2000 


m 4JJ4 c 




rC,r 42cll 


aciqgj 


Gn gW?«ffign&ft a 


i^epairj^yn^e^ena a 


igper ( 


n SsW 




43.035.43 


\mm 


81,1273 

to the 


,2074.. . 

Solicit 


Dt Ger 


leral d 


135jRacific Enginering r jPol O/S payment 

manditig the sum or outstanding pavme 


CQ r 

nts to 


668911 

r renal 


rs 


36,784.72 


1 216/2006 


1068655 


207 


1906 


1101 


127iPacific Equities J. 


Uan-Mart)6 (Rent Incf 


CQ 


83T288 




191,292.37 



and maintenance conducted between May and December 2002 for the vehicles 
belonging to the Royal PNG Constabulary and the Commissioner of Police. They 
claimed that despite repeated demands to the Office of the Commissioner of 
Police, the Police was unable to make the payments as verbally agreed to between 
the Company and the Police. That letter also referred to section 5 notice 



559 



requirements under the Claims By and Against the State Act, 1996. The letter in part reads; 

. In these circumstances we believe our client is able to satisfy the requirements to show cause pursuant to section 
5(2) (c) of the Claims By and Against the State Act, 1996for the principal legal advisor to extend the period 
within which to give notice of this claim. 

We therefore seekyour approval to treat this correspondence as notice of our clients claim pursuant to section 5 of 
the Act and look forward to your confirmation in 30 days. " (Refer to OD "3 ") 

Attached to that letter was correspondence between the General Manager of the Company 
and Sam Inguba, Commissioner of Police including computer generated printout of the 
invoices issued for the Company's Spare Parts and Workshop for all jobs conducted on 
Police Vehicles from May to December 2002. (Refer to OD"3") 

The Writ of Summons No. 307 of 2004 was registered and filed at the Waigani National 
Court Registry on 25 th March 2004. The party named to this proceeding was the Independent 
State of PNG as the Defendant. The Commissioner of Police was not named as a defendant. 
(Refer to NC"4"). 

The Statement of Claim and the pleadings lack substance as it does not relate the complaint 
to the State. The omissions noted are:- 

a. No reference as to the state's responsibility to be vicariously liable to the complaint made 
against the Commissioner of Police for non-payment on the provision of work 
performed under a verbal agreement to provide maintenance and spare parts to its 
vehicle. 



560- 



The pleading does not disclose what the State has incurred as a result of the failure by 
its agent namely the Royal Papua New Guinea Constabulary ("RPNGC") to setde the 
debts. 

The relevant parts in the pleadings (See paragraph 2, 3, 4, 5, &6 of WS) relate to the 
correspondence and matters raised between the Commissioner of Police and the 
Company. 

The request to maintain and service all police vehicles is not supported by any 
contractual arrangement where State Entity such as the Police Force must comply with 
the Tender requirements for the procurement of goods and services. 

The pleadings also include reference to section 5 notice requirements and the State's 
failure or refusal to acknowledge the written request to extend time. In fact there is no 
correspondence or notation sighted to indicate that the State had in fact responded 
given the nature of the quantum of the claim which is over Kl million. 

Warner Shand Lawyers (per Mr. Frizzell) filed Notice Motion on 25 th March 2004 seeking 
orders that "the proceedings are deemed to have been issued upon notice pursuant to section 
5(2)(c)(ii) of the Claims By and Against the State Act 1996. There is also a prerequisite that 
sufficient cause be shown by the Plaintiff that the Principal Legal Adviser i.e. the Attorney 
General has not given his/her approval to grant further extension to file a claim against the 
State. Mr. John Liu, Financial Controller for the Claimant Company provided Affidavit in 
support of the application restating the work done on police vehicles and the demand for 
payment of the debt. 

It is noted that the Solicitor General (Mr. Kuvi as acting Solicitor General) filed its Notice of 
Intention to Defend the Claim onl3th May 2004. That was done in 



561- 



accordance with, section 9(a) (i) of the Claims Bj and Against the State Act, 19% which requires 
60 days after the writ has been served on the State. No further documents tided Defence was 
sighted as filed by the State in relation to the matters pleaded in the Statement of the Claim. 

On 28 th July 2004, Mr. Mark Vara, Clerk employed at Warner Shand Lawyers deposed in his 
Affidavit of Service filed with the Court to the effect that a letter dated 16 th July 2004 
addressed to the Solicitor General advising application will be made to enter judgment in 
default in accordance with National Court Practice Directions. (Refer to NC"8") 

A Draft Order filed on 8 th September 2004 and ordered by the Motion Court Judge on 1 8 th 
August 2004 confirmed compliance with section 5(2)(c)(ii) of the CBS A Act. The Order was 
entered by the Registrar on 26 th August 2004. (Refer to NC"9") 

Default Judgment was filed by the Plaintiff on 8 th September 2004 as ordered by the Court 
on 25 th August, 2004 and entered by the Registrar on 3 rd September 2004. The Order related 
to the failure of the Defendant to file its notice of intention or defence and the judgment in 
default was ordered in favor of the Plaintiff in the sum of K2,074,l 69.64 and interest on that 
sum accruing at the rate of 8% per annum from 25 th March 2004 until payment. (Refer to 
NC"4"&NC"10"). 

Certificate of Judgment pursuant to subsection 13(2) of the CBS A Act was filed by the 
Plaintiff on 13 th September 2004 basically certifying that the Plaintiff obtained default 
judgment in the sum of K2,074,l 69.64 and interest. The Registrars certification also included 
the following clause:- 

the judgment maybe satisfied; or 

the State proposes to takefurther action in this matter and satisfaction of judgment cannot take place. 



562- 



15. Pursuant to section 14 of the CBS A Ad, Mr. Francis Kuvi, then acting Solicitor 

General expressed his concern over the Certificate of Judgment to Mr. Mundua 
Kua, the lawyer having carriage of the matter. Those concerns were expressed to 
Mr. Kua in an Internal Minute dated 14 th September 2004. Mr. Kuvi's Minute 
states as follows 

.. You are the action officer in this matter on behalf of the State. 

I will not endorse this Certificate off udgmen for payment until I receive a detailed brief from you 
explaining how this judgment of more than two (2) million Kina has been allowed to go through by you 
byjotfiling both Notice of Intention To Defend and Defence within time. 

You must also note that we are still within the 40 days appeal period as of the 25 th August 2004 in 
case there may be grounds for lodging an appeal or applying to set aside this defaultjudgment if it has 
been obtained by way of ex parte application. " (Refer to SG"13"). 

The same Minute also contains a handwritten note from the Secretary & Attorney- General 
dated 27 th September 2007 with the directive to Mr. Kuvi "Pis get the explanation from Mr. Kua 
and if it is not satisfactory the officer must be charged. (Signed). " (Refer to SG" 13") 

It seems that the Minute and direction from the Attorney General & Secretary for Justice 
[including that of the Solicitor General] to Mr. Kua did not provoke an immediate response 
from Mr. Kua. Mr. Kua was not concerned about the urgency and the fact that the State was 
to pay almost K1.5 million for the debt. Mr. Kuvi wrote to Mr. Kua by Minute dated 5 th 
October 2004 and stated; 



563- 



"I refer to my minute to you dated 14' h September 2004 regarding the above matter. You have not responded 
to that Minute. 

You are to provide an explanation as to how a Default Judgment was entered against the State in excess of 
¥2 million in this matter. 

This is a substantial amount of money and we need to do something about the judgment. " (Refer to 
SG"14") 

The records from the SG file indicate that no further action was taken against Mr. Mundua 
Kua and that he was not charged by the acting Solicitor General for insubordination and 
professional recklessness as a practicing lawyer in the State Office. However in the interest of 
the State, the then acting Solicitor General did not take it upon himself as the chief litigation 
officer of the State to institute an appeal upon review of the Certificate of Judgment in order 
to properly deal with the issues of liability and quantum with the Plaintiff/ Claimant. 

The State engaged the services of Paul Paraka Lawyers as evidenced by the Notice of Change 
of Lawyers acting for the Defendant State filed with the Court on 30 th November 2004. Mr. 
David Dusal of Paraka lawyer wrote to the Commissioner of Police relating to the issue of 
the debt owed to the Company and invited the Commissioner of Police to comment on the 
allegations raised in the Plaintiffs Statement of Claim. 

On 8 th August 2005, Paul Paraka Lawyers through its lawyer Mr. David Dusal provided its 
brief to the acting Solicitor General outlining its review on the file. The lawyer concluded as 
follows; 

"Upon receiving instructions, we conducted a file search on the 29 h of November 2004 and ascertained that 
the Plaintiffs Application for Default Judgment was granted in favor of the Plaintiff in the sum of 
K2,074, 169.64 per annum from 25 th March 2004 until payment 



564- 



for failure of the Defendant to file Notice of Intention to Defend and Defence. There 
was no appearance on behalf of the Defendants. Also a Certificate of Judgment 
Pursuant to Subsection 13(2) of the Claims by and Against the State Act wasfiled 
by the Plaintiff on the 1 3 th September2004. 

We have closed our file and have the matter referred back to your office as the matter was concludedprior to 
us receiving instructions. " 

The Law firm ceased acting for the Solicitor General on 1 st August 2005. It is obvious from 
the beginning that the matters reviewed by Paul Paraka lawyers was clearly raised by Mr. 
Kuvi in his memo to Mr. Kua on two separate occasions weeks apart. There was no reason 
for the brief out to Paul Paraka Lawyers as the worst was already a known fact in the Office 
when the Certificate of Judgment was served on the Office. The significant findings by Mr. 
Dusal were that "non appearance on behalf of the Defendant?' at the hearings was the factor 
culminating in the orders made against the State. (Refer to SG"18") 

On 5 th March 2008, Mr. Neville Devette, acting Solicitor General sought advise from the 
Commissioner of Police as to the payment of the liquidated sum of K2,074,l 69.64 and that 
office record indicated that no payment has been made since 25 th August 2004. (Refer to 
SG"19") 

list of Relevant Documents 

Ref No. Document (WS 307 of 2004 or SG151/04) NC"l"National Court Writ of Summons 
File Cover Notations 

SG "2" SG 151/04 File Cover Notation 

OD 3 Letter from Warner Shand Lawyers to Solicitor General dated 10* 

February 2004 re: Notice of Claim against the State Pacific Engineering & 
Repairs (PER). 



565- 



Attachments: 

Letter to Sam Inguba dated 23 January 2003 from Pi-Na LuLiu, General 
Manager, PER on outstanding payments of Invoice 

Outstanding Invoice for May to December 2002. 

NC "4" Writ of Summons 

NC "5" Notice of Motion filed 25/03/04-section 5 notice 

NC"6" Affidavit of John Liu dated 23< d March 2004 re: outstanding debts 

and section 5 notice and correspondence between Commissioner of Police 
and the company on the debts 

NC"7" Notice of Intention to Defend dated 11"> March 2004 filed 13 th May 

2004 by Solicitor General. 

NC "8" Affidavit of Service by Mark Vara (Warner Shand) filed on 25 lh July 

2004 re: default judgment and Attachment "A" in relation to the document 
served states; "Letter from Warner Shand Lawyers to the Solicitor General 
dated /(?* July 2004 advising application will be made to enter judgment in 
default in accordance with National Court Practice Directions. " 

NC "9" Draft Order filed 8 th September 2004 and signed by his honor Gabi 

AJ on 25' h August 2004 in relation to confirmation of section 5 notice 

NC "10" Order as per Draft Order of 25"> August 2004 and filed in court on 26" > August 2004. 

NC "11" Default Judgment ordered 25 lh August 2004 and filed on 8 lh September 2004. 

NC 12 Certificate of Judgment pursuant to Subsection 13(2) of the Claims By and Against 
the State Act 1996. filed on 13 lh September 2004. 

SG "13" M A te dated 14' h September 2004 from Mr. Kuvi (a/SG) to Mundua Kua re: K2, 074, 
169.64 Default Judgment-Pacific Engineering & Repairs limited-WS No. 307 
of 2004. Attachment: 



566- 



1. Certificate of Judgment with directions from AG re: brief on the order. 



SG "14" Minute dated 05* October 2004 from Mr. Kuvi (a/SG) to Mundua 

Kua re: K2, 074, 169.64 Default Judgment-Pacific Engineering & 
Repairs limited-WS No. 307 of 2004 

NC 15 Notice of Change of Lawyers filed on 30 th November 2004 by Paul 

Paraka Lawyers re: acting for the State as Defendants lawyers 

SG 16 Letter by Mr. David Dusal of Paraka Lawyers to the Commissioner 

of Police dated 29 th November 2004, re: WS 307 of 2004 and 
payments 

SG "17" Letter or brief to SG by Mr. Dusal on 08 th August 200S on review 

and conclusion on the Judgment Order of 25 th August 2004 

NC 18 Notice of Ceasing to Act filed by Paraka Lawyers on 1 st August 2005. 

SG "19" Letter by Mr. Devette to Commissioner of PoEce dated 5 th March 

2008 re: payments on the Judgment Order of 25 th August 2004. 



indings 



Claim liability and Quantum 

The claim for liability is solely the responsibility of the Department of Police with respect to 
the unpaid invoice. The delay in payment is also caused by the Department of Finance 
though it very much the fault of Police Force that no valid contract exists to enforce such a 
claim. 

Claimant 

The Plaintiff/ Claimant has no valid cause of action against the State as it does not 
show as to how the State can be held liable for the arrangement that existed 
between the Department of Police and the Claimant without a lawful contract in 
existence. 



567- 



• Attorney-General and Solicitor General 

The Office of the Attorney General and Solicitor General failed to file the NOID and 
defence on time therefore allowing the Claimant with the right to obtain a default judgment. 
The State had sufficient grounds to deal with the claim in respect of section 5 notice 
requirements as the claim was well out of time. 

Compliance issues 

Claim By and Against the State Act, 1996 

The claim was out of time but State failed to file defence thereby allowing the claimant to 
get order of the court as to extension of time to file claim. 

NEC Decision 150 of2003 

The claim was in excess of Kl million but no payment has been made to date. There is a 
high likelihood that contempt proceedings can be instituted by the Claimant to enforce 
the judgment against the State. 

Statute of Frauds and Limitation Act 

Not considered as it is not applicable to the matter under review. 

Public Finances (Management) Act, 1996 

The Department of Police failed to comply with tendering procedures and that no valid 
contract exists where it involves State Institutions such as the police force in terms of 
procuring services such as maintenance and spare parts for vehicles and equipment. 

The Commission however notes that despite our requests for further information from the 
witnesses namely Sam Inguba (former Commissioner of Police); Tom Kulunga, Hodges Ette 
(Royal PNG Constabulary) were not able to attend the hearings nor provide any further 
information. The Commission only refers to evidence and documents it has on hand to make 
certain findings. 



568- 



THE REVIEW OF FURTHER AND ADDITONAL INFORMATION 

33. The file was opened on 13 th October 2008 and the Transcript of Proceedings is attached for ease 
of reference (See pages 875 to 883 of the Transcript). A review of all the responses either by 
telephone, personal interviews conducted and correspondences with documents have been 
collated and filed for reference. The relevance of these materials based on our assessment 
and review to date reveals that:- 

The Pacific Engineering and Repairs Limited have provided services to the Police on 
a daily basis. Payments by the Police were not forthcoming and thus accumulated 
into the claim which was ordered by the Court under a default judgment for 
liquidated sum of K2,074,169.64 and interest plus costs for the proceedings. 

The default judgment was propedy entered by the National Court in 2004. Confirmed 
by Paraka Lawyers who reviewed the files and that Mr. Kua was negligent in the 
discharge of his duties as a lawyer having carriage of the matter on behalf of the 
State. The Solicitor General at that time, Mr. Kuvi refused to sign a Certificate of 
Judgment because Mr. Kua did not comply with the direction to furnish a brief to his 
Office on the default judgment. It is important to note the concerns of the then 
Solicitor General, Mr. Devette on 5 th March 2008 to Mr. Hodges Ette, Principal 
Legal Officer, Commissioner of Police on the payments though no response was 
received and recorded. (Refer to Document "SG 19") 

Due to our persistence to obtain information and data in relation to the payments by 
the Police, the Commissioner of Police has furnished to the COI computer printout 
of payment that have been made to PER to discharge the liability for the 2002 
claims. The Commissioner of Police 



569- 



provided evidence of such payment though it does not include the interest 
that has accumulated on the default judgment ordered by the Court on 
August 2004. That was confirmed by Superintendent Orlando A..lvare A DPS, 
Director Transport. The appropriate documentation is on file, and that 
indicates that some payments have been made to reduce the debt. The 
Company through Mr. Liu has advised that it does not intend to pursue the 
claim due to the receipt of payments, but it has not indemnified the 
Commissioner of Police on the default judgment which is now outstanding 
for 4 years. 

d) From our reconciliation of the invoices and payments made by RPNGC 

and based on the records of Pacific Engineering and Repairs Limited a total 
amount of Kl,503,499.86 has been paid to PER. The break of payments 
received is indicated below. (Refer to the bulk documents supplied by 
PER to COI on 19 th November 2008) 

125, 522.75 
279, 086.58 
A 419, 940.01 
A 338, 638.28 
A 340.262.24 
KL 503. 499.86 

That outstanding amount is K570,719.78 plus interest that has accumulated since 
September 2004 and the costs of the proceedings. 

Transcript of Proceedings 

• COIFINANCE 32 dated 13 th October 2008 



570- 



COIFINANCE 59 dated 26 th January 2009 - Mr. Mundua Kua's evidence as to 

his failure as state counsel on record to attend court hearings and entry of default 

judgments. 

COIFINANCE 61 dated 28 th January 2009 - Mr. Francis Gambu Kuvi's 

evidence on the Minutes he wrote to Mr. Kua requesting an explanation of the 

default judgment. 

Findings 

From the evidence received by the Commission, the findings are as follows :- 

There was non-compliance with section 5 of the Claims by <<& Against the State Act 
and the State's failure to promptly advise the Claimant that the claim was out of 
time. 

The Statement of Claim under the proceedings disclosed no cause of action against 

the State but the Commissioner of Police, 

The Solicitor General and/ or his officers failed to conduct due diligence on the 

claim in consultation with the Commissioner of Police. 

The Commissioner of Police did not give due regard to the provisions of tendering 

and procurement' under the Public Finances (Management) Act, 1996. 

Payments made by the Commissioner of Police to the Company amount to 

Kl,503,719.78 with the balance of K570,719.78 remaining and including the 

interest having accrued to date. 

Recommendations 

The Solicitor General in consultation with the Office of the Commissioner of 
Police and the Department of Finance to take necessary action to settle the 
balance of default judgment (in arrears) and interest accrued to date. 



571- 



The Commissioner of Police to consider procurement and tendering procedures when 
engaging service providers at the expense of the State. 

Consequential Legislative Reforms 

> Public Finances (Management) Act- provisions to deal with offending Departments and 
State Entities for non compliance and blatant disregard of the government 'j 
tendering' process. 



572- 



(d) Pacific Helicopters Ltd 

Parties 

For the State 

(a) Solicitor General & Attorney General 

For the Plaintiff 

Pacific Helicopters Limited 

Pacific Properties & Investment limited 

Shepherd Aviation Limited 

Others (if any) 

Department of North Solomons (WS 345 of 1997) 

Department of National Disaster & Emergency (WS 346 of 1997) 

Department of Defence (WS 347 of 1997) 

Department of Civil Aviation (WS 1200 of 1997) 

Department of Village Services (WS 1209 of 1997) 

The State (WS 1210 of 1997), (WS 1710 of2000) 

Douglas John Rosser, CEO, CAA (WS 1439 of 2003) 

Eric Ami (National Disaster & Emergency) (WS 1302 of 1997) 

Terms of Reference 

The applicable Terms of Reference to this claim is TOR 2 , 3 and 4 
Documents and Investigations conducted at 

The documents the subject of review and examination were conducted at 



573- 



National Court 
Department of Finance 
Pacific Helicopters Limited 

The Relevant Facts 

PACIFIC HELICOPTERS LIMITED operated helicopter services in PNG and is based 
at Goroka, Eastern Highlands Province The Company provided its helicopters for charter 
and hire to various government line agencies of government (Police, Prime Ministers 
Department, Electoral Commission, Civil Aviation, Department of Village Services and 
Provincial Affairs, Department of Defence, Department of North Solomon's). 

The company instituted several court proceedings between 1996 and 2000 against the State 
and its line agencies due to the moneys owing for helicopter services provided to the various 
government agencies amounting to an aggregate of over K5 million. The proceedings are 
summarized below have been acknowledged and admitted by the State as having no defence 
at all to the claim. 

WS 345 of 1997 of 1 995 Pacific Helicopters -v- Department of North Solomons 

<& State 

Summary judgment for Kl,236,l 11.85 together with interest at the rate of 8% per 

annum from the date of filing of the Writ to date of payment of judgment debt in 

full. 

(Judgment entered on 24 July 1998 per Sawong J at Goroka) 

(Certificate of Judgment entered 26 th August, 1998) 

WS 346 of 1995 Pacific Helicopters PL, -v- National Disaster Surveillance <& 
Emergency Services & State 



574- 



Claim for providing helicopter charter for use of the NDS&ES from June 1993 to 
July 1994, the total sum of the unpaid invoices totaling Kl,539,626.47. 

Summary judgment for Kl,539,626.47 together with interest at the rate of 8% per 

annum from the date of filing of the Writ to date of payment of judgment debt in 

full. 

(Judgment entered on 24 July 1998 per Sawong J at Goroka) 

(Certificate of Judgment entered 26 th August, 1998) 

WS 347 of1995 Pacific Helicopters P/L -v- Department of Defence <& State 

Claim for providing helicopter charter for use of the DoD from July 1 994 to August 
1994, the total sum of the unpaid invoices totaling K10,566.16. 

Summary judgment for K10,566.16 together with interest at the rate of 8% per annum 
from the date of filing of the Writ to date of payment of judgment debt in full. 
(Judgment entered on 24 July 1998 per Sawong J at Goroka) 
(Certificate of Judgment entered 6 th August, 1998) 

WS 1 200 of 1 997 Pacific Helicopters P/L -v- Sam Geno, Director General for 
Civil Aviation <& State 

Claim based on various agreements made between the parties for providing 
helicopter charter for use of the CAA, August 1994, May 1996 and November 1996 



575- 



Default judgment for K185,284.24 together with interest at the rate of 8% per annum 
from 20 th November 1997 until full payment of judgment debt in full. 
(Judgment entered on 20 October 1999) (Certificate of 
Judgment entered 7 th June 2002) 

WS 1 209 of1 997Pacific Helicopters P/L -v- Colin Travert^, Secretary, 
Department of Village Services & Provincial Affairs <& State 

Claim based on various agreements made between the parties for providing helicopter 
charter for use of the Department of Village Services & Provincial Affairs 

Final judgment for K51,045.98 together with interest at the rate of 8% per annum 
from 28 th November 1997 until full payment of the debt. (Judgment entered on 3 rd 
September 1999) (Certificate of Judgment entered 24 th February 2000) 

WS 1439 of 2003 PaciGc Helicopters Ltd -v- Douglas John Kosser, Director of 
CAA, CAA of PNG and State. 

A claim that PHL entered into an agreement with Turner Aviation of Australia for 
the purpose of assisting in firefighting operations in Australia for a period of four 
months. PHL agreed that it would hire to TA its PNG registered Bell 212 helicopter 
(registration No, P2-PAX) for the sum of AUD$1,500 per hour for a period of four 
(4) months. In order for PHL and TA to perform the purpose of the agreement, it 
was necessary for PHL to have permission from the Australian Civil Aviation Safety 
Authority (CASA) to operate the said helicopter in Australia. TA applied to CASA on 
behalf of PHL for permission for PHL to operate the said helicopter in Australia. On 
2 nd December 2002, CASA did not approve the routine operations of PNG registered 
aircraft in Australia due to difficulties with 



576- 



entry certification and the conduct of continuing safety surveillance of PNG 
registered aircraft by PNG CAA. PHL sued the Director of PNGCAA and 
the State for its failure or neglect of duty to carry out their duties of 
inspections and surveillance to the standard required to demonstrate 
compliance with International Civil Aviation Safety Requirements. 

PHL is claiming damages for breach of contract in a sum equivalent at the 
date of judgment to AUD$360,000.00 with interest according to statute and 
costs. 

An Order was made by the National Court on 17 th December 2003 and 
entered by the Registrar on 22 nd December 2003. 

The Order of the Court is as follows: 

That PHL be at liberty to enter judgment in the sum of Kina equivalent 

to AUD360,000.00 at the official BPNG exchange rate as at date of 

judgment. 

That the State pay interest for date of issue of the Writ according to 

statute. 

That the State pay the Plaintiffs costs of an incidental to this 

application. 

The Certificate of judgment was issued by the Registrar on 6 th August 2004 
for the sum of I<922,367.41 being the sum awarded to PHL. 

WS 1302 of1997Pacific Helicopters Ltd -v- Col. Brie Am, OBE as the 
Director General for National Disaster, Surveillance and Emergency 
Services and State. 



577- 



Default judgment entered against the Defendants joindy and severally for the sum of 
K610,194.37 including legal costs incidental to the proceedings. 

CLAIMS BY PACIFIC PROPERTY LIMITED AND SHEPHERD AVIATION 
LIMITED AS PART OF THE PACIFIC HELICOPTERS GROUP OF COMPANIES 

Our examination of the court proceedings related to PHL, two particular matters were also 
listed as being part of the PHL proceedings. The two matters are discussed below; 

(1) WS 1210 of 1997 Pacific Property P/L trading as PBF -v- State 

A claim made against the Department of Health and National Judicial Staff Service 
respectively. The Plaintiff entered into an agreement or various agreements with the 
government agency at Goroka in April 1995, August, 1995, October 1995, August 
1996, September 1996, October, 1996 and November 1996 for provisions of building 
and maintenance services identified by the Agents. 

-The service provided to the Department of Health was to upgrade the STD 
clinic at Goroka Base Hospital. 

-The service provided to NJSS was for the building of Kainantu Court House. 
The accumulated costs on the unpaid invoices totaled Kl 3,286.58 with interest 
accrued at the agreed rate of 1.5% at I<2,870.72. 

It was noted by the Commission that section 5 notice was pleaded in the WS 
(paragraph 2 of the Statement of Claim). 



578- 



It was noted on the court documents that Final judgment for Kl 6,157.32 together 
with interest at the rate of 8% per annum from 28 th November 1997 until full 
payment of the judgment debt was entered by the court on 15 th July 1999. 

Certificate of Taxation dated 18/10/99and Bill of Costs taxed on 5 th October 

1999 at KL914.55- 

(Certificate of Judgment filed 11 th November 1999) 



(2) W5T710 of 2000 Pacific Helicopters Ltd -v- State 

f (Millennium Jobbery incident involving a helicopkf^ome^by^J&j 



A claim made against members of the Royal PNG Constabulary (RPNGC) 
for unlawful damage caused to aircraft owned and operated by PHL, namely 
an Aerospatiale Ecuruiel Helicopter AS 350 BA, Serial Number 1181 
bearing registration Mark P2-PHA (the Aircraft). On or about the 17 
December 1999, the Aircraft was hijacked by armed criminals. At that time, 
members of RPNGC were alleged to have intentionally damaged the 
Aircraft by gunshot, whilst it was in flight without the consent of the owner. 

PHL claimed various heads of damages by claiming that due to the /, 
negligence of the members of the RPNGC taking reasonable care to avoid 
causing damage to the aircraft, the unlawful discharge of firearm thus 
rendering the Aircraft a total loss to the Company. 

It was also noted from the court documents that section 5 notice pleaded in 
the WS (paragraph 2 of the Statement of Claim). 

The claim by PHL; 

a. sum of USD737,375.00 being damages for loss of the Aircraft." 



The sum of K50,500.00 being damages and consequential loss and expense. 

The sum of AUDI2,036.00 being loss paid to BP PNG Ltd and CCR by PHL. 

Interest upon all the damages awarded to the PHL at the rate of 8per centum per 

annum payable on and from the date of the service of the Writ. 

Costs 

Other orders 
Judgment that (1) the State pay PHL US$1,622,401.82, A$27,896.04 and K2,803.42 and (2) 
The Defendant pay the Plaintiffs costs of the proceedings concluded on 3 September 2004, 
to be agreed or taxed. The judgment endorsed by the Registrar to take effect on 17 th 
December 2004. The Orders made on 17 th December 2004 was entered by the Registrar on 
31 st January 2005. 

The Company successfully obtained default judgments on each of the proceedings filed with 
the National Court. Certificate of Judgment was authorized by the Solicitor General and 
submitted to the Department of Finance for payments. The Department of Finance 
commenced payments by installments commencing May 2000 amounting to K4,360,000.00. 
A payment in excess of Kl million was paid out of Trust Fund Suspense Account No. 2. 

CONSOLIDATED PROCEEDINGS UNDER ORIGINATING SUMMONS NO 
793 OF 2004 

(Refer to the decision of Justice Davani in OS 793 of 2004 Pacific Helicopters ~Limited 
& Pacific Property <& Investment Limited & Shepherd Aviation Limited -v- Thaddeus 
Kambanei, Secretary for Department of Finance and the Independent State of PNG 
(2007) Unreported 29 th November 2007) 

The proceedings were instituted by PHL to enforce outstanding judgment and to deal with 
the State's failure to pay judgments. The plaintiff .obtained separate 



judgments against the defendants for amount in excess of K14 million. The State 
paid approximately K8.4 million. The sum outstanding on 11 judgments is 
K8,437,094.44. 

The proceedings relate to WS 347 of 1995, WS 346 of 1995, WS 345 of 1995, 
WS1209 of 1997, WS 1305 of 1997, WS 1200 of 1997, WS 1210 of 1997, WS 1056 
of 1999, WS 316 of 2000 and WS 1439 of 2002 where Certificates of Judgments 
were served upon the Solicitor General. 

The Court observes at page of the judgment that "1 1 judgment debts have been 
outstanding/ or more than 3 years and clearly a very unreasonably longperiod of time. Interest has 
continued to run on all outstanding amounts. Section 14(5) of the CEASA recognises the 
plaintiffs right to apply for Mandamus. The plaintiff is entitled to apply for Mandamus and 
other appropriate orders, the other appropriate order being for the first defendant to appear and 
be examined as to budgetary appropriations towards payment of judgment debts, if they have 
applied and if not, to explain the order in which these monies wen applied and when the plaintiff 
will be paid out. " 

Her honor (Davani J) draws attention to lack of management and professional 
oversight by the Office of the AG/SG which has caused the State with the burden 
of settling huge debts due to the neglect and don't care attitude of the state 
lawyers. Some aspects of her judgment are relevant to the inquiry. 

PAYMENTS BY THE DEPARTMENT OF FINANCE 

The State commenced paying the plaintiff in May 2000 by instalment and so far 
paid K4.360 million by 1 July 2006. 

On 1 6 th October 2000, the Managing Director wrote to Sir Mekere Morauta, then 
Prime Minister and Treasurer seeking his personal intervention in the matter of 
outstanding debts owed to Pacific Helicopters Limited by a number of 



581- 



Government departments and institutions. On 5 th December 2000, the then Prime Minister 
and Minister for Treasury, Sir Mekere Morauta, wrote to Secretary, Department of Finance 
and Treasury in reference to the letter of 16 th October 2000 directing the Secretary to settle 
the claim by end of 2000. 

The ministerial direction was seen to be in direct conflict with the roles and 
responsibilities of the office of the Solicitor General under the CBAAS Act. 

Mr. Zacchary Gelu, then acting Solicitor General advised the then Secretary for Finance, Mr. 
Kambanei by letter dated 5 th September 2002 that the Company had successfully secured 
judgments against the State and its various departments and that the State was indebted to 
the Company by way of judgments in a total sum of K5, 128,024.00 inclusive of costs and 
interests to date. Copies of all the relevant judgments were attached including a reconciliation 
of amounts owed less the amounts paid to date. 

The letter further stated that the principal sum was K3,41 1,805.00 and the accrued interest 
was Kl/71 6,21 8.00. The total sum K5,l 28,024.00 less paid Kl,218,599.93 on 16* January 
2002 left with the balance outstanding at K3,901,817.93 to be paid as of the date of the 
letter. 

The Department of Finance cashbook shows that payments by instalment were made 
between 2000 and 2006 totalled K9,495,359.02 (inclusive of judgment debts). We refer to 
Table 1 below; 



Table 1 



Date 


Account 


Details 


Cheque No. 


Payments 


19/05/2000 


207 


4201 


2101 


135 


Re: Pacific Helicopter 


617891 


47,379.92 


30/05/2000 


207 


4201 


2101 


135 


SAR-Hire of Helicopter 


618817 


25,096.50 


23/11/2000 


207 


4201 


4123 


135 


DEF-O/S payment on arr 


633820 


701,621.00 


19/12/2000 


207 


4201 


2101 


135 


Pmnt of Invoice Nos. 


636621 


43,513.95 



582- 



5/01/2002 


207 


4201 


2101 


135 


O/S Judgment Debts- 


670055 


226,205.07 


5/01/2002 


207 


4201 


2101 


135 


Balance of Payment ( 


670259 


1,000,000.00 


17/06/2002 


207 


4201 


2101 


121 


206(VM) hire of Helicopter 


688579 


44,572.00 


17/06/2002 


207 


4201 


2101 


121 


206(VM)hire of Helicopter 


688579 


44,472.00 


2/07/2002 


207 


4201 


2101 


135 


Hire to cater for El 


690141 


2,000,000.00 


12/07/2002 


207 


4201 


2101 


135 


Services rendered due 


691216 


1,000,000.00 


25/09/2002 


207 


4201 


2107 


135 


C/Order W.S.N0.347 o 


697561 


500,000.00 


23/10/2002 


207 


4201 


2107 


135 


Part Pay. WSNol305o 


700346 


201,817.93 


29/11/2002 


207 


4201 


2107 


135 


C/Order 


704308 


50,000.00 


25/01/2003 


207 


4201 


2107 


135 


Part Payment-Outs. Co 


710196 


230,000.00 


17/02/2003 


207 


4201 


2107 


135 


Payment for O/S Judgment 


712250 


80,000.00 


30/05/2003 


207 


4201 


2107 


135 


P/Pymt of Court Judgment 


722463 


150,000.00 


28/07/2003 


207 


4201 


2107 


135 


Pmnt o/s c/order. In 


728499 


80,000.00 


23/09/2003 


207 


4201 


2107 


135 


Pmt o/s c/order (par 


734229 


80,000.00 


27/11/2003 


207 


4201 


4123 


135 


Certificate of Judge 


740919 


20,000.00 


4/02/2004 


207 


4201 


4123 


135 


Pmt of replacement c 


768173 


20,000,00 


24/06/2004 


207 


4201 


2107 


135 


Being for o/s judgment 


782286 


100,000.00 


8-12-2004 


207 


207 


1104 


144 


Charter Helicopter F 


797342 


47,520.00 


26/07/2005 


207 


4201 


2107 


135 


Payment of O/S Court O 


816101 


250,000.00 


31/08/2005 


207 


4201 


2107 


135 


Pmt for o/s court or 


818849 


100,000.00 


25/10/2005 


207 


4201 


2107 


135 


O/S Court Orders cla 


822375 


200,000.00 


26/10/2005 


410 


3 








O/S Court Order 


822397 


1,086,017.00 


23/12/2005 


207 


4201 


2107 


135 


O/S C/Order 349/02 


827182 


100,000.00 


3/02/2006 


207 


4201 


2107 


135 


O/S C/Order claim 


830543 


300,000.00 


23/03/2006 


207 


4203 


1104 


144 


Pmt hire of helicopter 


833348 


75,636.00 


23/03/2006 


207 


4203 


1104 


144 


Pmt hire of helicopter 


833348 


75,636.00 


27/03/2006 


207 


4201 


2107 


135 


O/S C/Order 


833715 


100,000.00 


11/05/2006 


207 


4201 


2107 


135 


O/S C/Order Pmt 


836499 


50,000.00 


13/06/2006 


207 


4201 


2107 


135 


O/S C/Order Pmt 


838293 


200,000.00 


4/07/2006 


207 


4201 


2107 


135 


O/S C/Order Pmt 


839501 


236,017.65 


10/08/2006 


207 


4201 


2107 


135 


Chopper Hire for Hon 


841817 


29,854.00 
















9,495,359.02 



583- 



The payments shown under Table 2 indicate that all successful proceedings between 
periods 1995-2000 varied from about Kl 0,000 to over K1.0 million. 



The following payments which are extracted from Table 1 and 
Table 2 reflect payments for judgments debts against the State 
K4,360,057.65 for the period under our review. 



referred to under 
which amount to 



Table 2 





Date 


Account 


Details 


Cheque No. 


Payments 


1 


5/01/2002 


207 


4201 


2101 


135 


O/S Judgment Debts- 


670055 


226,205 


2 


25/09/2002 


207 


4201 


2107 


135 


C/OrderW.S.N0.347o 


697561 


500,000 


3 


23/10/2002 


207 


4201 


2107 


135 


Part Pay.WS Nol305 o 


700346 


201,818 


4 


29/11/2002 


207 


4201 


2107 


135 


C/Order 


704308 


50,000 


5 


25/01/2003 


207 


4201 


2107 


135 


Part Payment-Outs. Co 


710196 


230,000 


6 


17/02/2003 


207 


4201 


2107 


135 


Pymt for O/S Judgment 


712250 


80,000 


7 


30/05/2003 


207 


4201 


2107 


135 


P/Pymt of Court Judgment 


722463 


150,000 


8 


28/07/2003 


207 


4201 


2107 


135 


Pmnt o/s c/order. In 


728499 


80,000 


9 


23/09/2003 


207 


4201 


2107 


135 


Pmt o/s c/order (par 


734229 


80,000 


10 


27/11/2003 


207 


4201 


4123 


135 


Certificate of Judge 


740919 


20,000 


11 


4/02/2004 


207 


4201 


4123 


135 


Pmt of replacement c 


768173 


20,000 


12 


24/06/2004 


207 


4201 


2107 


135 


Being for o/s judgment 


782286 


100,000 


13 


26/07/2005 


207 


4201 


2107 


135 


Payment of O/S Court 


816101 


250,000 


14 


31/08/2005 


207 


4201 


2107 


135 


Pmt for o/s court or 


818849 


100,000 


15 


25/10/2005 


207 


4201 


2107 


135 


O/S Court Orders cla 


822375 


200,000 


16 


26/10/2005 


410 


3 








O/S Court Order 


822397 


1,086,017 


17 


23/12/2005 


207 


4201 


2107 


135 


O/S C/Order 349/02 


827182 


100,000 


18 


3/02/2006 


207 


4201 


2107 


135 


O/S C/Order claim 


830543 


300,000 


19 


27/03/2006 


207 


4201 


2107 


135 


O/S C/Order 


833715 


100,000 


20 


11/05/2006 


207 


4201 


2107 


135 


O/S C/Order Pmt 


836499 


50,000 


21 


13/06/2006 


207 


4201 


2107 


135 


O/S C/Order Pmt 


838293 


200,000 


22 


4/07/2006 


207 


4201 


2107 


135 


O/S C/Order Pmt 


839501 


236,018 


















4,360,057.65 



584- 



The following were noted in respect of Payment No. 16 in Table 2 as payments made out of 
funds not legally available i.e. Trust Funds Suspense Account # 2. 

RECONCILIATION OF PAYMENTS-OVERPAYMENTS 

The volumes of documents sighted seem to indicate that the Department of Finance and the 
Office of the Solicitor General had a very difficult task with record keeping and there was a 
very serious possibility that over payment of the claim was to have exceeded court 
judgments, interest and costs. 

The Commission take notes that the lack of proper accounting of the payments has 
contributed to massive loss to the State in terms of excessive overpayments and fraudulent 
misappropriation of state monies. The Department of Finance and the Office of the 
Solicitor General's lack of coordination over scrutiny of the payments is a major area of 
concern and requires urgent scrutiny by both offices. The concern was raised by Mr. 
Kumura (then acting Solicitor General) in 2003 by letter dated 21 October 2003 to then 
Secretary for Finance, Mr. Kambanei with the advise that 

"...the claim be reviewed immediately in light of our assessment and that you instruct your personnel to conduct a 
reconciliation of the payments made to date and provide an updated schedule showing allpayments made to Pacific 
Helicopters from 1999 to 2003. 

In the event that these calculations may not be in agreement I would be obliged if your Department does a 
reconciliation of the payments made to date andforward a copyfor my records. 

...J would be grateful indeed if measures are taken to ensure that PAYMENTS made to Pacific Helicopters 
are checked against the details above to avoid double payments. " 

The Commission takes notes that "overpayment" of the judgment orders may have been 
paid out by the Department of Finance. There was a lack of proper accounting and 
reconciliation on the payments. 



585- 



INFORMATION PRODUCED FOR EXAMINATION 

Documents were produced for examination by way of summons from the 
following 

1. Haf£ Malcolm Smith - Kela, MP, Managing Director (MD) of Pacific 
Lelicopters 

The Managing Director, Hon, Malcolm. Smith - Kela, MP produced to the 
Commission copies of Court Orders and Judgement Debts pertaining to the 
payments made by DoF, a reconciliation of the payments he received against the 
Court Orders and a bound volume with a covering brief containing reconciliation 
showing payments received against the judgement debts. 



The Managing Director of Pacific Helicopter confirmed by letter dated 6 October 
2008 that payments made by Department of Finance did not clearly state which 
particular judgment debt was paid and therefore it was difficult to identify which 
judgments were paid and which judgment remained outstanding. 

Significant materials sighted from the documents reveal; 

I. -that the total judgment debts was about K14 million and by 2007 K9,l 96,197.40 
was outstanding. The outstanding amount included K4,820,564.45 in statutory 
interest accrued over the 15 years period. Some payments were made over the 
years but the interests were not paid which are included in the outstanding 
interests; 



586- 



-that the MD was unable to perform a reliable reconciliation since judgment 
debtors paid by DoF over the years were irregular and not made in sums that 
represent any particular judgement debts; and 

-that the DoF had not honoured the Court orders and were reluctant to pay the 
judgment debts in full. In 2007 the company went to court to enforce the DoF to pay 
for the outstanding to- date, which was about K8.4 million for 11 judgments. The 
company successfully obtained the judgments as handed down by Davani J on 29 
November 2007 that the judgments be enforced and that the DoF to make every 
effort to settie the debts. Payments made after that Court order are outside 

our TOR. 

Ian Augerea — Registrar of the Supreme Court and National Court 

The Registrar produced only one file related to WS 1056 of 1999 which was a 
claim for K845,534.00. Our review of the files indicated that the court proceedings 
were in order and default judgment was obtained by PHL. 

Documents 

Letter from the MD of PHL and current sitting Member for Eastern Highlands Regional 
to the then Prime Minister, Sir Mekere Morauta ( and also Minister for Treasury) 
requesting to settled out debts arising from court proceedings dated 16 October 
2000. (Ref: 3DoF). 

The letter by the Prime Minister, Sir Mekere Morauta and also as Treasury Minister 
requesting his Secretary in a letter dated 5 December 2000 to settle the outstanding 
judgment debt 



587- 



3. A letter dated 21 October 2003 by the then acting Solicitor General, Mr. John Kumura to 
then Finance Secretary, Mr. Thaddeus Kambanei requesting reconciliation on the 
payments made to PHL.(Ref: DoF 4) 

FURTHER AND ADDITIONAL INFORMATION AND MATERIALS 

REVIEWED 

The file was opened on 21 st October 2008. 

The matter was the subject of hearing on 21 st October 2008 (COIFINANCE38 dated 
21/10/08) and 26 th November 2008 A (COIFINANCE43 dated 21/11/08). A review of all 
the responses either by telephone, personal interviews conducted, correspondence and 
documentation received have been collated and filed for references. The relevance of these 
materials based on our assessment and review so far indicate that:- 

no documentation has been forthcoming and that renewed requests will be made to 
Finance on payment aspects and the Supply and Tenders Board for tendering of the 
use of the Helicopters. 

Judgment orders have been obtained for each of the unpaid invoices and that the 
payments aspects have yet to be verified by the Finance Department. 

With respect to the claims for unpaid invoices, is the result of non payment 
accumulated over a period of time which is of concern where the State Agencies have 
not complied with appropriate tendering procedures to engage PACHELI to provide 
air services. 

Status of the Inquiry into PHL Claim 



Ho witnesses were called. The Managing Director of the Company provided documentation 
on the payments received in satisfaction of the judgment 

Findings 

Evidence of gross abuse of the Trust Fund Suspense Account #2 as an expenditure vote for 
settling court ordered payments by the Department of Finance. Setdement of claims by 
Department of Finance made through the Trust Fund Suspense No. 2 Account There is no 
evidence that the payment of Kl million has been reimbursed to TFS#2 accounts based on 
the express approval of the Secretary for Finance. 

The government Agencies named in the court proceedings instituted by the PHL had 
committed the State to enormous expenditure in contravention of the procurement process 
under the PFMA. There was evidence that the government agencies have not observed the 
procurement provisions in the PFM Act and committed the State to a huge liability, especially 
the lack of ability of-the State to make prompt payments for hire and charter of helicopter 
from PHL. 

Pacific Helicopters Limited had successfully obtained judgments against those debts by 
default judgments since State failed to defend or had consented to the most of the orders for 
the debt incurred by the agencies named in the proceedings. 

Recommendations' 

The Office of the Solicitor General should keep a record of the payments made by the 
Department of Finance for the purpose of reconciling payments. In effect, it is 
recommended that the installment payments processed by the Department of Finance be 
collected by the SG and paid to Claimants. 



589- 



The Department of Finance maintains a proper register of all payments for the purpose of 
reconciling the account where the Claimant has a number of claims against government 
agencies and the State. 

The various government agencies, statutory bodies and instrumentalities are lawfully bound 
to procure goods and services, through the established tendering process under the PFMA. 

The government to take drastic actions against offending state agencies for noncompliance of 
the tender and procurement process under the PFMA. 

P. Consequential Legislative Reforms 

Public Finances (Management) Act- Enactment of provisions to deal with offending 
government Departments, agencies, statutory bodies for non compliance of the procurement 
and tendering process. 



(e) Wilfred Bongali t/a Hela Night Patrol 

r.OT File Ref: Matter No. 25 - WILFRED BONGALI & HELA NIGHT 
PATROL PTY LTD 

B. Parties 

For the State: 

Health Department/ Laloki Hospital 
Central Supply & Tenders Board (CSTB 1 ) 
Attorney General 

For the Claimant: 

Wilfred Bongali 

Hela Night Patrol Pty Ltd 

Others (if any) 

(b) Yama Security Services Ltd 

B. Matter 

Claimant awarded contract to supply security services for one (1) year 
Laloki Hospital 

Claimant alleges unlawful termination of contract 
State - no breach of contract 
No proceedings in Court 

Claim setded by Deed of Release for Kl .2Million 
Payment of Kl .2 Million by Department of Finance (payment in full) 
C- Recommended Findings 



No contract as it was not renewed and extended, as such no breach of 

contract 
No lawful basis for setdement 



Terms of Reference 

Attached herewith are copies of the Terms of Reference. This is a case which 
falls within the terms of reference of this inquiry. All the terms of reference are 
relevant and applicable to this case, however, this case falls squarely within Terns of 
Reference No.s', 1 (xii), 2 and 5 (i) to (vii). Also attached is the list of matters 
(including this matter) published in the newspaper. 

Documents and investigations conducted at: 

Attorney-General (AG) 
Solicitor-General (SG) 
Registry of National Court (NC) 
Department of Finance (Finance) 
Central Supply & Tenders Board (CSTB) 
Department of Health (Health) 
Laloki General Hospital (Laloki) 
Area Medical Store, Konedobu (AMS) 
Registry of Companies (Reg/Co. s) 
PNG Law Society (PNGLS) 
Internal Revenue Commission (IRC) 

Brief facts /Evidence 

1. Wilfred Bongali ("WB") is the owner (sole shareholder/director) of Hela 
Night Patrol Pty Ltd ("HNPPL"), a security company. State through the 



592- 



National Supply and Tenders Board ('NSTB 5 ) advertised the tender for provision of 
security services at Laloki Hospital. HNPPL together with Yama Security Services 
applied for the tender and where successful. Yama Security Services and HNPPL 
were awarded a joint contract for provision of security services at Laloki Hospital. 

2. There is no evidence of the actual contract on the Solicitor General file. The contract is 
identified as 'Contract No. G 3947'. The contract was awarded in July 1993 for a 
period of 12 months commencing on the 12 th July 1993 and ending on 31 st July 1994. 
The contract provided an option for renewal for two further periods of 12 months 
each, if the Board approves the extension. 

3. Because there is no evidence of the actual contract on file, we do not know the actual value 
of the contract. Wilfred Bongali states the contract was valued at K97,090.00 for the 
first twelve months (i.e. from July 1993 to July 1994). However, the total value of the 
contract contradicts that of the 1995 to 1996 value, as Mr Bongali claims it was for 
K51,788.40 (from 31 July 1995 — 31 July 1996, if the contract was renewed and 
extended). The question is how could it be decreased to K51,788.40 when the 
previous year was valued at K97,090.00? (Difference of I<45,301.60). 

Further, the amount (value of the contract) is contradicting his own quantum 
submission (see letter dated 2 September 1998 from Wilfred Bongali to Dr. Puka 
Temu - paragraph 8, No. 3 which is marked '1 - SG*). 



5. The National Supply and Tenders Board also do not have records of the 

contract been awarded to HNNPL. Attached hereto and marked "2 - SG" 
is a letter dated 27 January 1999 from Babaga R. Naime, Secretary to the 
Board (presumably Secretary to the Tenders Board) addressed to Dr Puka 
Temu, then Secretary Department of Health. 



593- 



6. Parts of the said letter reads (quote), 

Despite the absence of proper records, I do confirm that Heila Night Patrol P/L was awarded a 
portion of the above contract being for the Laloki Hospital. 

From the only record available, the contract was awarded in 1993 for a three (3) year term of which 
thefirst (P 1 ) twelve (12) months expired on the 3 1 st of July, 1994. 

Whilst 1 have no records on whether or not formal renewal was granted, the contractor claims that the 
services were continued from July, 1994 until sometime in early 1995. 

If the contractor's allegations are correct and despite the fact that no formal renewal was granted the 
contractor is legally entitle for payment of services rendered. ' Underlined my emphasis. 

The contract expired on 31 st July 1994 as it was not renewed. 

This was a "combined contract" and both Yama Security Services and 
HNPPL were paid for the services they each performed. 

Prior to the expiry date of the contract, Mr Pokarup Narakou wrote an Inter Office 
Memo dated 5 th July 1994 to the Assistant Secretary, Mental Health Services 
recommending renewal of HNPPL contract for a further term. (Copy of the memo is 
marked, '3 - SG 1 ). 



9. On 26 th January 1995, Mr Paul B. Songo, then Secretary for Health Department wrote 

to the Chairman of National Supply and Tenders Board advising termination of the 
said contract (Contract No. G 3947) citing reasons for lack of funds to maintain the 
contract. The Chairman was advised to inform HNPPL and Yama Security Services. 
(Marked '4 - SG herewith is the letter dated 26 January 1995. 



594- 



On 12 April 1995, Mrs Rossa Pahau, then Acting Assistant Secretary, Mental Health 
Services wrote to HNPPL and advised that the contract expired on 31 July 1994 and 
was not renewed for a further twelve (12) months as such was terminated as per letter 
from Paul B. Songo. The letter also advised HNPPL that its services will no longer be 
required as of the 21 st April 1995 (the letter is marked £5 - SG'). 

On 19 April 1995, Dr Puka Temu in his capacity as the then First Assistant Secretary 
again wrote to the Chairman, National Supply and Tenders Board following up on 
the letter of Paul B. Songo dated 26 th January 1 995 and again advising the termination 
of the said contract (letter marked, '6 - SG'). 

HNPPL disregarded the termination notice of the contract and continued to provide 
security services resulting in Mr Pokarup Narakou writing a letter to HNPPL on 25 
April 1995 to withdraw its security 7 personnel advising they were supposed to leave 
on 21 April 1995 as per letter by Rossa Pahau (letter marked, 7 - SG). 

Again on the 22 nd June 1995, Dr Puka Temu wrote to HNPPL to vacate the premises 
(the letter is marked, £8 - SG). The content of the letter reads, (quote) :- 

You are advised that as per our previous correspondence, your services were to be withdrawn from 
the Laloki Psychiatric Hospital in February of 1995. As you have defied these instructions you are 
advised that your services provided after our deadline will not be awarded. ' 

After the termination of the contract, it appears HNPPL was retained on a temporary 
basis to provide security services. See letter dated 12 March 2000 from Pokarup 
Narakou which is marked '9 - SG. Note this was on a 



595- 



temporary basis and the engagement was more or less on a as is needed basis and 
payments were made directiy from Laloki Hospital funds as such all services provided 
on a temporary basis where paid in full. 

On 9 th February 1995, (after expiry of the contract and termination), Wilfred Bongali 
wrote to the chairman acknowledging receipt of letter dated 6* September 1994 from 
National Supply and Tenders Board ("NSTB") purportedly extending the contract for 
a further twelve (12) months (marked '10 - SG'). There is no evidence of the letter 
dated 6 th September 2004 from the NSTB which is acknowledged by Wilfred Bongali 
in his letter. This is despite numerous letters from the Health Department advising the 
termination of the contract. If the contract was renewed and extended by the National 
Supply and Tenders Board, then it was done without the authority of the contracting 
(client) Department (i.e. Health Department). 

The truthfulness of the said letter from Wilfred Bongali is questionable for two main 
reasons. 

Firstly, he (Wilfred Bongali) responds to the letter after four (4) months have already 
passed although he states that he received the letter some months later. There is no 
evidence from the National Supply and Tenders Board renewing and further 
extending HNPPL contract for a further twelve months from July 1995 - 1995. See 
letter by Babaga R Naime marked '2 - SG'. 

Secondly, the said letter from Wilfred Bongali (9/2/95) appears to contradict terms of 
the meeting minutes of the National Supply and Tenders Board - No. 08/95 dated 1 
June 1995. Wilfred Bongali's letter is dated 9 th February 1995, whilst the meeting 
minuted is dated 1 st June 1995. The meeting minutes indicate that [quote] :- 



596- 



1.2 Contract No. G3947 - Provision of Combined Security Services 
Department : Health 
Date :1Cf May 1995 

Companies : (a) Ha%et Security Services, 



Hella Night Patrol, Boroko 
Yama Security Services, Boroko 
Lawa Security Services, Boroko 
Subject : Renewal of Contracts for their 1 st optional 

periods of a further twelve (12) months each. 

Decision : Deferred 01 / 06/95 

Reason : Client, Department of Health be asked to give 

their views in regards to the option of renewal. 

Meanwhile, Secretary of the Board is to 

provide a full report on the status of the 

contracts, refuting client's (D.O.H) allegations 

that this board had independently gone ahead an d 

made decisions without consulting them. 

Marked with <11 - SG' is the copy of minutes. 

19. From the minutes it appears the renewal and extension of the said contract was deferred 

for the reasons that Department of Health did not provide their views on the 
continuation of the contract. 

20. This is contradictory, as evidence clearly shows that the Health Department have advised 

both Mr Bongali and the National Supply and Tenders Board ('NSTB') of the 
termination of the said contract. The NSTB was advised by the Department of 
Health to advise HNPPL of the termination however, NSTB never advised HNPPL. 



597- 



On 15 February 1999, Wilfred Bongali wrote to the Solicitor General advising of the 
alleged unlawful termination of the contract and requesting that the matter be setded 
for K534,434.36. (Letter marked '12 - SG') 

On 11 March 1999, Mr John Kawi, former Solicitor General advised Mt Bongali that 
they would seek instructions from the Health Department before a formal response 
is made. (Letter marked '13 - SG). 

On 30 th March 1999, Bill Oscar Emos Lawyers wrote to Mr John Kawi, then 
Solicitor General on behalf of HNPPL requesting that the matter be setded for 
K534,434.36. The letter states that if the State fails to respond within seven (7) days 
proceedings will be filed in Court without any further notice (letter marked '14 - SG). 

On 9 th April 1999, the Solicitor General wrote to the Health Secretary attaching copy 
of Bill Oscar Emos Lawyers letter seeking instructions (letter marked '15 - SG). 

On 16 th November 1999, Dr Puka Temu in his capacity as Secretary, Department of 
Health wrote to the Solicitor General advising that based on the State Solicitors 
advice (State Solicitors letter not on file), the Health Department paid all its 
outstanding dues including damages on the principle of quantum meruit. As such 
HNPPL was paid all its dues and the Health Department was not indebted to 
HNPPL. The letter also stated that for some unknown reasons, Kl 2,945.60 was paid 
directly to Wilfred Bongali instead of HNPPL on 19 September 2007 (letter marked 
'16 -SG). 

The said letter states and (quote) :- 



598- 



; this review, I have established from the records held bj the Department of 
health that allpayments due to Hela Night Patrol "Ltd for services rendered have 
been paid. According to the Department records the followingpayments were made to 
Hela Night Patrol Ltd since 1993pursuant the terms of the contract. 

K15,873.00 

K6 3, 9 89. 00 

K65,496.80 

K7,307.00 (up to 29/02/96) 

K1 2,945.60 (paymentdate 19.09.97)' 

A total of Kl 65,611.40 was paid to HNNPL (Wilfred Bongali). 

On 1 May 2001, the Solicitor General wrote to HNPPL advising that the 
State did not owe HNPPL but instead HNPPL owed the State for excessive 
payments. The Solicitor General alleged that HNPPL owed the State 
K10,803.60 for over payment and threatened recovery action (letter 
marked '17 - SG'). 

On 16 May 2001, Wilfred Bongali responds to Solicitor General's letter of 1 
May 2001 and advised this time apart from the security contract at Laloki 

Hospital, HNPPL was also awarded a contract to provide security at Area 

/ 

Medical Store (AMS 1 ) Konedobu. Note there was never any mention 
of the security contract at Konedobu and this was the first time it was 
mentioned. We are not sure if AMS is covered in the same contract 
(Contract No. G3947) as the copy of the contract is not on file. However, 
there is ample evidence to show the contract was only in relation to provide 
security services to Laloki Hospital. This time the claim was assessed at 
K5,570,983.53 from K534.434.36 (initial offer to settle) the previous 
assessment by Wilfred Bongali (letter marked '18 - SG). (An increase of 
about K5,036,549.17 from the initial offer) 



599- 



It appears Mr Kawi then Solicitor General did a notation on the said letter from 
Wilfred Bongali to the lawyer having carriage to advise HNPPL that State will not 
settle the claim and HNPPL was at liberty to pursue the matter in court. The notation 
is dated 21 May 2001. 

The notation states (quote), . Advise this person that we will NOT settle. Hi can go to Court if he 
wants. P Kawi 21/5.' 

On 15 th August 2001, Dirua Lawyers on behalf of HNPPL wrote to Solicitor General 
seeking extension of time to give notice pursuant to s. 5 of the Claims By and Against 
The State Act (letter marked '19 - SG). 

On 8 th October 2001, Mr Francis Damem, then Secretary and Attorney General 
wrote to Dirua Lawyers refusing extension of time and at the same time advising that 
the claim was statute barred (letter marked '20 - SG). 

On 31 st July 2002, HNPPL filed OS proceedings (OS No. 424/2002) seeking 
extension of time to give section 5 .Notice. On 11 th September 2002, His Honour 
Justice Kandakasi dismissed the O.S proceedings for want of prosecution. Marked 
with '21 - SG is the copy of the Originating Summons and marked with '22 - NC is 
the copy of the court endorsement confirming that the O.S proceedings was 
dismissed for want of prosecution. Following are the documents filed together with 
the Originating Summons. They are:- 

Notice of Motion filed on 31 st July 2002 - marked '23 - SG; 

Affidavit of Wilfred Bongali filed on 31 st July 2002 - marked '24 - SG; 

Notice of Appearance by Powes Parkop Lawyers filed - 9 th August 2002- 

marked'25-SG; 



Affidavit in Support by Pokarup Narakon filed 7 th August 2002 -marked '26- 

NC; 

Affidavit of Service by Wilfred Bongali filed 8 th August 2002 - marked '27- 

NC; 

Further Affidavit of Wilfred Bongali filed 7 th August 2002 - marked '28 - 

NC; 

On 31 st October 2002, Peter Pena & Associates on behalf of HNPPL submitted a 
without prejudice quantum submission to the Solicitor General to setde the claim for 
K5,263,490.00 (letter marked '29 - SG'). 

On 26 th November 2002, Mr Zacchary Gelu wrote to Peter Pena & Associates 
acknowledging letter of 31 October 2002 and making a counter offer on a without 
prejudice for K346. 587.75 . (Letter marked '30 - SG) It appears after Mr Kawi left, Mr 
Gelu succeeded him. 

On 12 th December 2002, Wilfred Bongali on behalf of HNPPL enters into a Deed of 
Release with the State to setde the claim for Kl .2 million. Mr Gelu signs on behalf of 
the State. Note that Mr Gelu made a counter offer for K346,587.75, however, setded 
for Kl .2 million. 

Note: The original Deed of Release does not have Gelu's signature and the date. 
However the copy of the Deed of Release has Gelu's signature and the date. (Marked 
with '31 - SG' and '32 - SG' are copies of Deed of Release which has and does not 
have Gelu's signature, respectively. 

On 17 th December 2002, Gelu wrote to Finance Department to pay the claim for 
K1.2 Million (letter marked '33 - SG'). 

On 7 th April 2004, Mr Andrew Numbasa, First Assistant Secretary - Public Accounts 
Division from Department of Finance wrote to Mr Francis 



601- 



Kuvi advising that as per the instructions for stop payment on all deeds of release, the 
said claim by HNPPL (Wilfred Bongali) was put on halt until further review. Mr 
Numbasa also stated that whilst this was the case on at other deeds, the Solicitor 
General gave 'speedy clearance' to some deed of release claims. Mr Numbasa then 
sought instructions for clearance of Mr Bongali's claim. Mr Numbasa's letter is 
marked '34 - SG'. 

Mr Numbasa's letter may have being prompted by the NEC Decisions numbered NG 
07/2002 and 150/2003. More particularly NEC Decision No. 150/2003, paragraph 7 
which states :- 

7. 'approved that out of court settlement payment of any claims against the State in excess ofK1 million 
must at all times be deferred unless Solicitor General in consultation with the Attorney General 
furnishes in writing to the Secretary for Finance that in his deliberate judgment, State has no Defence or 
no reason to challenge the claim or appeal against the amount awarded. ' 

Marked'35-'and'36-'are copies of NEC Decisions referred above in paragraph 40. 

On 1 7 May 2004, Mr David Lambu a senior legal officer with the Solicitor General's 
Office wrote a note to Mr Kuvi on the said letter from Mr Numbasa stating (quote):- 

1s it in orderfor payment? Otherwise cancel the deed and renegotiate or proceed to trial How much money 
is involved in this case? 17105j04 — D Lambu' 

Refer to'34-SG'. 



43. On 22 nd June 2004, Mr Kuvi wrote to the Secretary Department of Finance 
advising/giving clearance of the payment to Mr Wilfred Bongali and 



602- 



advising to setde the claim and raise a cheque for K1.2 million payable to 
Patterson Lawyers as soon as possible to avoid any court action. Marked >37 
- SG' is letter dated 22 June 2004. 

Finance Department made the following payments:- 



1. 


ChqNo. 715394 - 


Kl 00,000.00 - 


20/03/03 


2. 


ChqNo. 716795- 


K100,000.00 - 


04/04/03 


3. 


Chq No. 782427 - 


Kl 00,000.00 - 


25/06/04 


4. 


Chq No. 786252 - 


K200,000.00 - 


05/08/04 


5. 


ChqNo. 796519- 


K200,000.00 - 


30/11/04 


6. 


Chq No. 797363 - 


K300,000.00 - 


09/12/04 


7. 


Chq No. 804829 - 


K200,000.00- 


10/03/05 



A total of Kl. 2 million was paid, effectively settling the claim (deed of release) in full. 
Copies of all the cheques are attached and all marked '38 to 44 - FD'. 

Also attached are copies of relevant Financial Forms (FF3 & FF4) in relation to the 
payments (cheques) referred to above in paragraph 43 & 44. 

Requisition for Expenditure (FF3) - K300,000.00 - 04/12/04 - 45 - FD; 

General Expenses (FF4) - K300,000.00 - 08/12/04 - 46 - FD; 

Requisition for Expenditure (FF3) - K200,000.00 - 26/11/04 - 47- FD; 

General Expenses (FF4) - K200,000.00 -26/11/04-48- FD; 

Requisition for Expenditure (FF3) - K200,000.00 - 05/08/04 - 49- FD; 
(vf) General Expenses (FF4) - K200.000.00 - 05/08/04 - 50 - FD; 



603- 



Requisition for Expenditure (FF3) - Kl 00,000.00 - 24/06/04 - 51- FD; 
General Expenses (FF4) - Kl 00,000.00 - 24/06/04 - 52 - FD; 
General Expenses (FF4) - Kl 00,000.00 - 04/04/03 - 53 - FD; 
Requisition for Expenditure (FF3) - K100,000.00 - 54- FD; 
General Expenses (FF4) - K100,000.00 - 20/03/03 - 55 - FD. 

46. It appears some or if not all the cheques were paid to Patterson Lawyers Trust Account. 
Wilfred Bongali wrote to the Solicitor General advising that all payments should be 
made direcdy to him and not Patterson Lawyers. As a result Wilfred Bongali wrote to 
Mr Kuvi (then Solicitor General) on 4 th July 2004 to advice Finance Department not 
to make any payments to Patterson Lawyers as the firm never act for Mr Wilfred 
Bongali/HNPPL (see letter marked '56 - SG) 

Mr Kuvi's letter reads (quote), 
'Re: Wilfred Bongali v. The State 

I make reference to the above matter and my letter tojou dated the 2Z' d of June 2004 regarding the 
same. Mr Bongali has now approached my office again and claimed that his claim should not be paid d- 
Vatterson Lawyers Trust Account, as they never acted for him at any stage. I have also perused the file 
and the said lamers never acted for Mr Bongali . Mr Bongali, has instead requested that future payments 
be made directly to himself c/ - Solicitor General's Office, Department of Attorney General, P.O Box 
591, WAIGANI, National Capital District. I trust you will accede to this request. ' 

Following the letter from the Solicitor General all cheques were then written direcdy 
to Wilfred Bongdii Note that this were for .services 



604- 



rendered by Hela Night Patrol L td as such chequ es should have being drawn in the 
name of Hela Night Patrol Ltd. 

Evidence of Witnesses 

The following persons were called to give evidence. They are:- 

Wilfred Bongali (claimant); 

Peter Pena, Principal of Peter Pena Lawyers; 

Zacchary Gelu, lawyer and former Solicitor General; 

Mundua Kua, lawyer. 
I will address the evidence of each of the above persons. 

Evidence — Peter Pena. Principal of Peter Pena Lawyers 

Mr Pena basically provided documents under cover letter dated 31 st March 2009 
essentially advising that his firm was only involved in assisting the claimant negotiate 
setdement. Mr Pena states that he did not have all necessary documents at the time of 
drafting the letter to the Solicitor General proposing K5.6 million but the assessment 
was based on instructions from the claimant. 

Mr Pena stated that the proposal to the Solicitor General for K5.6 million was made 
on a "without prejudice" basis as such the Solicitor General still had the authority to 
consider the legitimacy of the proposal (or the claim itself). Mr Pena further stated 
that after the drafting of the letter of proposal to the Solicitor General, the claimant 
withdrew instructions and as such his firm nor Mr Pena was involved in the drafting 
and signing of the deed of release. 



605- 



It is submitted that whilst Mr Pena is deemed to be bound by instructions of his 
client, he is also duty bound to advice his clients of the propriety and or otherwise of 
the claim. Mr Pena should have insisted on obtaining copies of all necessary 
documents before the drafting the offer letter. In essence there was no basis at all for 
the assessment of K5.6 million. 

Evidence - Wilfred Bongali ("claimant") 

Mr Bongali provided a written statement dated 20 th January 2009 and also appeared 
on several occasion(s). Essentially, Mr Bongali maintained that his claim was genuine 
and confirmed that he had a joint contract with Yama Security Services for provision 
of security services. Mr Bongali confirmed that the claim by Yama Security Services 
was settied as a result of NEC 
.^-d'easroS and as such the same should be done to his claim although his / claim was 

setded at Kl .2 milHbn half the amount settled in Yama Security 

I Services claim. 

lte~5Tal5mitted above, there was no basis at all for the settlement. 

Evidence — Mundua Kua. lawyer 

Mr Mundua Kua was formerly a lawyer with the Solicitor General's Office. He was 
asked by Mr Gelu to have carriage of the file to provide a response to the letter of 
offer by Peter Pena. Mr Kua confirmed that he provided a counter offer for the sum 
of K340,000.00. Asked what the basis for such assessment was, he was not able to 
provide any legal basis but basically stated that the claim was setded at K1.2 million 
despite his assessment of the case. 



43. He also confirmed that he witnessed the signing of the deed of release. He 
stated that he was not present during the signing but the deed was only 



606- 



brought to him asking him to sign as a witness. He confirmed that it was a practice in 
the Solicitor General's Office whereby anybody can sign a deed as witness. 

Mr Kua admitted in evidence that if the claim was setded at K346,000.00 he would 

accept full responsibility otherwise the matter 
was setded at Kl .2 million which he had no knowledge of. 

Despite the grave anomalies surrounding this matter, Mr Kua failed to bring up this 
issues either with the Solicitor General (at that time Mr Gelu) or otherwise with the 
claimant (or its lawyers). This is confirmed by the fact that Mr Kua without any legal 
basis at all made an offer for K346,000.00. It is evidenced from the fact that the letter 
he drafted failed to even state the basis upon which such assessment was made, no 
mention of case laws etc. Mr Kua failed in his duty as a lawyer to protect the interest 
of the State. 

Evidence - Zacchary Gelu. lawyer and former Solicitor General 

Mr Gelu gave evidence admitting that despite lack of section 5 notice, claim being 
statute barred and no basis at all for the setdement, setded the claim for K1.2 million. When 
asked if his actions were grossly negligent and was bordering on fraud, stated that it was not 
fraud, but basically noncompliance with the laws. 

Mr Gelu's actions may amount to fraud and unreasonable conduct as a lawyer. Mr 
Gelu failed to protect the interest of the State and appeared to abuse his powers as 
the Solicitor General at the material time. 

Findings 



607- 



Firstly, in this case there is no evidence of the actual contract on file as such the exact 
value of the contract cannot be ascertained. Wilfred Bongali states the contract was 
valued at K97, 090.00 for the first twelve months (i.e. from July 1993 to July 1994). 
However, the total value of the contract contradicts that of the 1995 to 1996 value, as 
Mr Bongali claims it was for K51, 788.40 (from 31 July 1995 - 31 July 1996, if the 
contract was renewed and extended). The question is how could it be decreased to 
K51,788.40 when the previous year was valued at K97,090.00? (difference of 
K45,301.60). 

There is no evidence of the contract been renewed and extended. However, there is 
evidence (as is submitted above) that the contract was terminated after completion of 
the first 12 months (i.e. from July 1993 -July 1994). Commissioners despite the lack 
of information in relation to the value of contract for the first 12 months (initial 
contract period), we submit that the Commission can safely conclude that the 
contract was valued at K97,090.00. The Commission can also safely find that the 
contract was terminated after the first 12 month period and was not renewed and 
extended. 

There is also evidence that after termination of the contract, HNPPL was engaged on 
a temporary basis by the Laloki Hospital. This would mean that after July 2004, all 
engagements were on temporary basis. However, there is evidence showing that 
HNPPL was advised in no uncertain terms that HNPPL services will no longer be 
required as of 21 st April 1995. As such services provided after 21 st April 1995, cannot 
be honoured. Further, evidence indicates that payments in relation to the engagement 
of HNPPL on a temporary basis were fully paid from Laloki Hospital funds. As such 
HNPPL was not owed any money for its temporary engagement 

Secondly, if the contract was valued at K97,090.00 (i.e. for the first 12 months, from 
July 1993 to July 1994), then HNPPL was folly paid fox 



A 



services rendered. Health Department records showed that HNPPL was paid 
a total of K165,611.40. This would mean the balance of K165,611.40 from 
K97,090.00 (which is K68,521.40) is payment for services rendered on a 
temporary basis after expiration of the contract. 

There was no basis for the claim as there was no contract. The contract states that 
the contract must be renewed after the lapse of the first 12 months, in this case, 
evidence clearly show the contract was not renewed and extended for a further 12 
months, as such, there was never a breach of contract, as the contract was never 
renewed and extended for a further 12 month. The contract was completed after the 
first 12 months as the client department (Health Department) refused to renew and 
extend the contract. 

This is a clear case of fraudulent conduct of the lawyers/officers of the Solicitor 
General who were involved in the facilitating of this payment. The basis of the 
allegations of fraud are that:- 

there was sufficient evidence on file showing that HNPPL was not owed any 
money at all. Further, if there is a claim for damages for unlawful termination or if 
HNPPL is still owed by the Health Department for services rendered but were not 
paid, then the appropriate action was to have the matter dealt with by the court. 

HNPPL 5 s (Wilfred Bongali) request seeking extension of time to give notice 
pursuant to section 5 of the Claims By and Against the State Act by Dirua Lawyers was 
refused by the then Attorney General. Further, the Attorney General found that the 
claim was statute barred and therefore cannot be enforced or brought in a court of 
law. As result, HNPPL (Wilfred Bongali) filed O.S proceedings seeking extension of 
time to give notice to the State which was dismissed for want of prosecution. 



'609 



Also, the then Solicitor General, Mr Kawi and the lawyer having carriage M 
Tuva stated that the claim will not be entertained and if HNPPL (Wilfred Bongali) 
insisted the mater should go before the court. 

Despite the advice or position taken by the Attorney General and the Solicitor 
General, it appears after Mr Gelu became the Solicitor General, Mr Gelu and Mr 
Mundua Kua (presumably after the file was transferred from Tuva to Kua), both 
Messrs Gelu and Kua elected to setde the claim. 

Further, following the letter from Peter Pena & Associates proposing to setde 

the matter for K5,263,490.50, Mr Gelu replied 
making a counter proposal for K346,587.75. Mr Gelu states in his letter (quote), . ^All 
in all I am offering to settle jour clienfs claim at ¥346, 587. 75. ' 

Although, Mr Gelu made a counter offer for K346,587.75 and despite the 
advice and position taken by the Attorney General and Mr Gelu's predecessor (Mr 
Kawi), a deed of release was entered into and signed on 12 December 2002 settling 
the claim for K1.2 million. How could Mr Gelu make a counter offer for 
K346,587.75 and later setde the claim for K1.2 million kina? 

The actions of Messrs Gelu and Kua amount to fraud and an act to defraud 
the State. 

Further the Commission, will note that following signing of the deed of 
release on 12 December 2002 and the letter from Mr Gelu to the Finance 
Department to setde the claim for Kl .2 million pursuant to the deed of release, the 
first payment was made in 2003 prior to the decision to halt all payments as per NEC 
decision No. 150/2003 dated 25 July 2003. Following the NEC decision, all 
payments were put on hold 



610- 



until further clearance from the Attorney General or his nominee (see Item No. 3, 
NEC Decision No. 150/2003) 

(i) With respect we submit that Mr Kuvi's actions amount to fraud as he acted contrary to the NEC 
Decision 150/2003, Item 8 - which states (quote) 'approved that the Attorney General 
immediately apply to the court for Judicial Review of any questionable claims or out of court 
settlement in excess of K5 00, 000. 00 

In this case, there is ample evidence (documentation) on Solicitor General's file (as 
referred above) showing that the deed of release should not have been signed and 
entered into as evidence clearly shows that the State is not indebted to HNPPL 
(Wilfred Bongali). In this case, as stated (noted) by Mr Lambu to Mr Kuvi, Mr Kuvi 
could have applied to the court 



to set aside the deed of release. 



54. Wilfred Bongali's actions amount to fcaud, as how could he allege that he was awarded 
to provide contract/ for the AMS when clearly (evidence) shows that he was only 
awarded/contract for the Laloki Hospital. Further, how could Mr Bongali claim up to 
K534,434.36 (initial offer to setde) and then later up to K5, 570, 983. 53 (an increase 
of about K5,036,549.17 from the initial offer) when the contract was only valued at 
K97,090.00. Furthermore, there was never any renewal and extending of the contract, 
as such how could a breach occur as there was never any contract? The contract was 
completed after the first 12 months as Health Department refused/declined to renew 
and extend the contract. 

Recommendations 



1 . An investigation must be carried out in relation to the payments to Yama 

Security Services as they relate to the same contract totalling K3 million. Yama 

611- 



Security Services was paid due to an NEC submission allegedly sponsored by the then 
Minister for Justice. There is evidence of the matter been raised in the Parliament during 
debate but it is not clear if the matter was pursued further. Newspaper evidence provided by 
Mr Bongali showed that the former Prime Minister, late Bill Skate when queried of the NEC 
decision approving payment to Yama Security Services stated that he was not aware of the 
NEC decision. The matter should be investigated. 



2. Mr Gelu and Mr Kua be referred to the Lawyers Statutory Committee for investigation. A 
further recommendation be made that both Messrs Gelu and Kua should never be 
employed as heads or otherwise of any Government or Statutory Organizations. 



3_ Persons involved in this matter must be referred to appropriate authorities 
such as the Police Fraud Squad for possible investigation. 

The Claims By and Against the State Act, 1 996 must be amended to include, that any 
out of court setdements must be approved by the Attorney General. Section 5 Notice 
must also be served on the Primary Defendants. 

An investigation must be conducted into the reasons why the NSTB failed to act on 
the advice by the Health Department ("client Department") to terminate the contract. 
Health Department advised NSTB to terminate the contract, however, NSTB acted 
without the instructions from the client Department. 

Solicitor General to file recovery action. INDEX TO DOCUMENTS 
TENDERED AS EVIDENCE 
Document Name Identification 



612- 



letter dated 2 September 1998 1 - SG 

letter dated 27 January 1999 2- SG 

Inter Office Memo dated 5 th July 1994 3- SG 

letter dated 26 January 1995 4- -SG 

letter dated 12 April 1995 5- -SG 

letter dated 19 April 1995 6- SG 

letter dated 25 April 1995 7- ■ S G 

letter dated 22"d June 1995 8- SG 

letter dated 12 March 2000 9- «SG 

letter dated 9 th February 1995 10 - S G 

Meeting Minutes of the CSTB 1 1 - S G 

letter dated 1 5 February 1999 12 - S G 

letter dated 1 1 March 1999 1 3 - S G 

letter dated 30 th March 1999 1 4 - S G 

letter dated 9 th April 1999 1 5 - S G 

letter dated 1 6 th November 1999 1 6 - S G 

letter dated 1 May 2001 1 7 - S G 

letter dated 1 6 May 2001 1 8 - S G 

letter dated 1 5 th August 2001 1 9 - S G 

letter dated 8 th October 2001 20 - S G 

Originating Summons 21 -SG 

Court Endorsement 22 -NC 

Notice of Motion filed on 31 st July 2002 23 - S G 

Affidavit of Wilfred Bongali filed 3 1 st July 2002 24 - S G 

Notice of Appearance 25 -SG 

Affidavit in Support by Pokarup Narakon 26 -N C 

Affidavit of Service by Wilfred Bongali 27 - N C 
Further Affidavit of Wilfred Bongali filed 7 th August 2002 28 - N C 

letter dated 31 st October 2002 29 - S G 

letter dated 26 th November 2002 30 - S G 



Deed of Release dated 12 th December 2002 31 - SG 

Deed of Release dated 1 2 th December 2002 32 - SG 

letter dated 1 7 th December 2002 33 - SG 
letter dated 7 th April2004 3 4 - S G 

Copies of NEC Decisions (NG 07/2002) 35 - 

Copies of NEC Decisions (NEC 1 50/ 2003) 36 - 

letter dated 22^ June 2004 37 - SG 

copies of cheques confirming payments 38 — 44 FD 

copies of Financial Forms (FF3 & FF4) 45 - 55 FD 

letter dated 4 th July 2004 56 - SG 

COI letter to Central Supply & Tenders Board 57 - COI 

COI letter to Laloki Hospital 58 - COI 



614- 



F. Decisions of the National Executive Council 

The Commission examined five (5) matters, which concerned and/or arise from decisions of the 
National Executive Council CNEC). 

Joel Aundambui 

Thomas Murowo 

Mathew Pawen 

Moale Haus and Sambra Haus 

AOG Jubilee University 

The Commission's findings specific to each matter are contained in the respective investigation 
reports. Generally, the findings are: 

5> Processes to be strengthened to avoid fabrication of documents emanating from 
NEC (decisions, minutes, letterheads, instruments etc) 

A NEC refrain from making decisions that concern the merits of claims against the 
State without consultation with the Attorney General 

y State-owned institutions should not be established without the full consultation 
with the key agencies concerned 

y There is immediate need for improved processes and procedures for monitoring 
and implementation of NEC Decisions in a timely manner 

* Appropriate action is promptly taken where there is non-compliance with 
Decisions of the NEC 



615- 



(a) Joel Aundambui 



PARTIES: 



For the State: 

Department of Justice and Attorney General ('DJAG') 

Department of Finance (T)oF') 

Department of Prime Minister & NEC ('DPMNEC') 

Post (PNG) Ltd ('PPL') 

Claimants: 

(a) Joel Aundambui, Ivo Aundambui, Felix Tambui, Mathew Tambui, Philip Boindu, Robert 
Tangapi and Eric Tambui ('Claimants') 

NATURE OF CLAIM: 

The claimants alleged that their copyright to certain clay pot images was breached by 
PPL on 22 January 2003 when PPL issued postage stamps featuring those clay pot 
images. 

The claimants commenced proceedings (WS No. 584 of 2004) in the National Court 
against PPL and another for damages for breach of copyright. The State is not named 
as a party and the claim is still pending. 

DOES THE MATTER FALL WITHIN THE TERMS OF REFERENCE 

1. On 23 February 2003, PPL's Managing Director, Peter Maiden, referred to this 
Commission by way of a brief, PPL's file on the claim, particularly to 



"616 



inquire into the authenticity of a purported NEC Decision No. 1 72 of 2008 at Special 
MeetingNo. 29 o/"2008 dated 19 September 2008. 

Although the State was not named as a party to the court claim, commenced by the 
claimants on 24 May 2004, the purported NEC Decision No. 172 oJ2008 directed PPL 
to pay K52 million in setdement of the claim. 

The claim is still pending determination on liability and damages. 

No payments made by PPL. 

No payment has been made by the Department of Finance (DoF'). 

In the circumstances, this matter falls within Terms of Reference No. 1, 2, 3, 5, 8 and 

12. 

SOURCES OF INFORMATION AND DOCUMENTATION 

1. The brief comprises information obtained from all persons considered by the 
Commission as having an interest in the inquiry into this matter, in particular- 
National Court Registry — original Court file referenced WS No. 584 of 
2004 

Department of Justice & Attorney General - 

a. Evidence of Dr Allan Marat, Minister for Justice & Attorney General 



(c) Post (PNG) Ltd 



617- 



(i) Evidence of Peter Maiden, Managing Director 

National Executive Council - (i) 
Evidence of — 

o Winnie Kiap, former Secretary 

Claimants — 
(i) Evidence of — 

o Sam Kemaken, lawyer, Kemaken Lawyers 

The relevant transcripts of proceedings are provided with this Brief. 

The critical evidence given by each of these witnesses is discussed where relevant in 
the course of the findings (F) of this Brief. 

CHRONOLOGY OF EVENTS 

1997 

On 1 January 1997, Post (PNG) Ltd (TPL) was corporatized becoming a separate legal entity 
from the State. 

2003 

On 22 January 2003, PPL issued postage stamps featuring clay pot images on K0.65 and 
K4.00 stamps. 

On 25 November 2003, Joel Aundambui of Kolmang Claypot Products offered in writing to 
David Pank, Post Master, PPL, Wewak, K200,000.00 as commission for providing research, 
investigation and supply of information in relation to the quantity of production and sale of 
the K4.00 and K0.65 stamps currendy sold in the last 12 months ('Offer'). The Offer was 
payable within 4 weeks subject to the outcome of the court proceedings and payment 
received from PPL ('Offer'). 



618- 



4. On 25 November 2003, David Pank, Retail Manager, Wewak, PPL confirmed his telephone 
conversation with Kent Pato, Legal Officer, PPL earlier that day in which he: 



(a) Reported his conversation with an Ivan Hurst of Wewak Tourism Office 
at approximately 1:35 p.m. in which he was rejected a K200,000.00 offer for 
information about ICO. 65 and K4.00 clay pot stamps; 

Provided 3 signed copies of the Written Offer, which was left with 

(b) PPL counter-officer, Sixtus Juavi, by Ivan Hurst 

on 24 November 2003 and 25 November 2003 prior to (a) 

above and without his knowledge. 

On 26 November 2003, David Pank, Retail Manager, Wewak, PPL confirmed his telephone 
conversation with Kent Pato, Legal Officer, PPL earlier that day in which he: 

Reported the counter-officer, Sixtus Java, told the Assistant Retail Manager, 

Robert Yahimbu ('ARM 5 ) that two (2) male adults, who did not disclose their 

identities, were out at the counter waiting to see him; 
Reported the ARM to attended to the counter and a person who identified 

himself as Jerome Mot, a terminated PPL employee, requested the return of the 

Written Offer 
2004 

On 24 May 2004, Bayam Lawyers filed Writ of Summons No. 584 of 2004 endorsed with a 
statement of claim on behalf of seven plaintiffs. The plaintiffs named are Joel Aundambui, 
Ivo Aundambui, Felix Tambui, Mathew Tambui, Philip Boindu, Robert Tangapi and Eric 
Tambui ('Claimants'). The defendants are PPL and Tony Sipa trading as Grafox Studios. 



619- 



By letter dated 24 July 2007 to PPL, Apo & Co Lawyers offered setdement ofWS 584 of 
2004 for a sum between K39,060,000.00 and K42,31 5,000.00 representing 12% and 13% 
respectively of the earnings from the sale of the postage stamps by PPL. 

On 24 July 2004, PPL filed a Defence in WS 584 of 2004 denying liability. 2008 

By letter dated 4 April 2008 to Hon. Arthur Somare, Minister for IPBC, Joel Aundambui 
requested his political support to get PPL to consider the claimants' proposal and for 
setdement of the court proceedings. 

By letter dated 15 May 2008, PPL's Legal Officer, Kent Pato briefed Sumasy Singin, 
Chairman, IPBC on the status of WS 584 of 2004 and the basis for defending the claim. 

By letter dated 31 August 2008, Joel Aundambui instructed Kemaken Lawyers to represent 
the plaintiffs in WS 584 of 2004 as Jimmy Apo of Apo Lawyers practicing license had 
expired. 

By letter dated 21 October 2008 to Hon. Patrick Tamur, Minister for Communication & 
Information, Kemaken Lawyers provided to PPL copy of a purported NEC Decision No. 1 72 
o/2008 at Special Meeting No. 29 <?/2008 dated 19 September 2008. PPL was circulated a 
copy of this letter. The purported NEC Decision read as follows: 

"Subject: Payment of claim for Kolimangh Clay Product for K52 million Kina - 

On 1 9 th September 2008, Council: 1. Referred the above mentioned claim to Post PNG Ltd for 
payment to the claimant. 



620- 



Approved and directed that claim payment ofK52 million be paid in full to Kolimangh Clay 
Product by Post PNG Ltd (claimant) within the next 21 days. 

Approved and advise the claimant to submit proper legal documents for payment to Hon. 
Patrick Tammur, Minister for Communication and Information." 

By letter dated 27 October 2008 to Ms Winnie Kiap, Secretary, NEC, PPL's 

Managing Director, Peter Maiden, requested a copy of NEC Decision No. 172 oj2008 
via special meeting number 29/2008 and supporting submissions. Copies were circulated to 
Managing Director, IPBC; Legal Counsel, IPBC; Secretary, Minister for Communications & 
Information. 

By letter dated 28 October 2008, Winnie Kiap, Secretary, NEC informed 
PPL that 

the NEC Decision No. 1 72 of2008 does not relate to payment of K52 
million resulting from WS 584 of 2008 between Joel Aundambui & others v 
PPL & others; 
the document NEC Decision No. 172 of2008 is fraudulent; 

She would refer the matter to the Commissioner of Police for investigation. 

By letter dated 28 October 2008 to Apo & Co Lawyers, PPL's Legal Officer, Kent Pato, 
sought confirmation on whether the plaintiffs had changed legal representation in view of 
correspondence received from another law firm purporting to represent the plaintiffs. 

By letter dated 28 October 2008 to Kemaken Lawyers, PPL's Managing Director, Peter 
Maiden, confirmed their telephone conversation earlier that 

da 
y requesting a formal notice of change of lawyer be filed and served on PPL. 



621- 



18. By letter dated 30 October 2008 to Kemaken Lawyers, PPL's Managing Director, 
Peter Maiden, sought to ascertain the source from which the NEC Decision 
No. 172 oJ2008 was obtained. 

By letter dated 30 October 2008 to the Chairman, PNG Lawyers Statutory 
Committee, PPL's Managing Director, Peter Maiden, lodged a formal complaint 
against Sam Kemaken of Kemaken Lawyers on three (3) grounds: 

Purporting to act for the plaintiffs in WS 584 of 2004 without filing and 

serving an appropriate notice; 

Supplying a fraudulent NEC Decision No. 1 72 oJ2008\ 

Requesting payment of K52 million when the fraudulent NEC Decision No. 

172 of2008 directs PPL to make payment to Kolimangh Clay Product. 

2009 

On 1 February 2009, Post Courier published a report on the NEC Decision No. 172 oj2008. 

By letter dated 1 8 February 2009, PPL's Managing Director, lodged a formal complaint with 
Mathew Damaru, Detective Superintendent, Fraud & Anti- Corruption Unit to investigate 
the source of the fraudulent NEC Decision No. 172 of2008. 

By letter dated 18 February 2009 to Apo & Co Lawyers, PPL's Legal Officer, Kent Pato 
enquired whether that firm was still acting for the plaintiffs in WS 584 of 2004. 

By letter dated 18 February 2009 to.PPL, Apo & Co Lawyers confirmed they still acted for 
the plaintiffs in WS 584 of 2004. 



622- 



24. By letter dated 23 February 2009, PPL served on Apo & Co Lawyers sealed 
copy of an Amended Defence and Cross-claim filed 9 October 2007. 

On 23 February 2003, Post Courier published another report on NEC Decision 
No. 172 o/2008 as informed by lawyers for the plaintiffs in WS 584 of 2004. 
On 2 March 2009, Post Courier published another report on NEC Decision 
No. 172 of2008 as informed by the office of the Attorney General. 

On 20 March 2009, the National Court made consent orders transferring WS 584 
of 2004 from Madang to Waigani. 

F. FINDINGS 

(c) Liability In Issue 

(d) Non-compliance with Section 5 - Claims Bj and Against the 

State Act 1996 

The claimants did not give notice of their intention to make a claim against 
the State in accordance with Section 5 of the Claims By 
& Against the State Act 1996 (Claims Acf), or at all. 

The claimants' cause of action accrued on 22 January 2003 when PPL issued 
the postage stamps. The claimants had six (6) months from that date to give 
notice of their intention to make a claim against the State. That is, by 22 July 
2003. 

However, PPL is a separate legal entity from the State. As such, the claimants 
were not required to give such notice under Section 5 of the Claims Act for purposes 
of the claim. 



623- 



Nevertheless, to the extent the court proceedings were purportedly settled by 
the alleged NEC Decision 172 of 2008 on 19 September 2008, the claimants may 
seek enforcement of that decision for which their notice of their intention to 
make a claim was to be done no later than 19 March 2009. 

No such notice was ever given nor was extension sought to give such notice, 
as confirmed in evidence by the Attorney GeneralJDr Allan Marat, and Sam 
Kemaken of Kemaken Lawyers for the claimants. 

Therefore, NEC Decision No. 172 of 2008 is not enforceable as against the 
State. 

R.b It is recommended that the Solicitor General and Attorney General 
refuse any notice given, or extension to give such notice, by the 
claimants under Section 5 of the Claims Act to enforce purported 
NEC Decision No. 172 of2008 

(e) No merits in claim against State 

a. No reasonable cause of action disclosed against State 

The State is not named as a party to WS 584 of 2004. The Statement of Claim 
endorsed to WS 584 of 2004 purely relates to alleged breaches of copyright by 
a State-owned entity that has separate legal personality from the State. 

There is no reasonable cause of action disclosed against the State. 



624- 



p3 It is found that there is no reasonable cause of action 
disclosed against the State 

a. Fraudulent NBC Decision 172 of2008 

The claim was purportedly setded by NEC Decision No. 172 of 
2008 in which PPL was directed to pay K52 million in setdement of 
the claim. 

Dr Allan Marat, Attorney General & Minister for Justice gave 
evidence that he was the Minister for Justice & Attorney General at 
that time. He denied knowledge of the claim. Further, there 
were no records on the proceedings in the offices of the Attorney 
General or Solicitor General's office, including no Section 5 
notice. Moreover, he was neither aware of nor privy to any 
submissions to, or decision by, NEC recommending settlement of 
the matter, including by another Minister to NEC at all. He also 
commented that the purported NEC Decision: 

"was a very good attempt forging the Prime Minister's signature. I am not a 
forensic expert but Prime Minister does not sign like this, 1 know. " 

There was also written evidence by Ms Winnie Kiap former 
Secretary, NEC that her signature on the purported NEC Decision 
No. 172 of2008 is forged, not genuine and that NEC never made a 
decision to that effect. 

Sam Kemaken pursued payment for the claimants on the basis of the 

NEC Decision No. 172 of2008 without conducting due diligence 

in ascertaining its authenticity. Further, the NEC Decision No. 172 of 



625- 



2008 directed payment to be made by PPL to "Kolimangh Clay Pqf and 
not" Kemaken Lauyers". 

pb It is found tha t Sam Kemaken was grossly negligent in not conducting 
due diligence to ascertain the authenticity of the fraudulent NEC 
Decision No. 172 of 2008 

ft) It is recommended that Sam Kemaken' s referral to the Lawyers 
Statutory Committee by PPL's Managing Director be pursued pb It 
is recommended that Joel Aundambui should be referred to the 
Royal PNG Constabulary for fraud investigation 

Assessment of damages 

The claim under WS 584 of 2004 is an active matter in which both liability and 
damages have yet to be determined. Nevertheless, the State is clearly not a party to 
which the claim relates. 

However, despite PPL's separate legal status from the State, it is a State- owned 
enterprise. Thus, the State must assist PPL in ensuring that any claim based on the 
fraudulent NEC Decision No. 172 of 2008 is vigorously and successfully defended. 

ft) It is recommended that the Solicitor General assist PPL in ensuring that any 
claim based on the fraudulent NEC Decision No. 172 of2008is vigorously 
and successfully defended 

Steps taken (or not taken) by Solicitor General in defence of the claim 



626- 



29. This aspect does not arise for consideration as the State is clearly 
not a party to which the claim relates. 

Settlement 

The State is not named nor joined as a party to WS 584 of 2004. However, 
those proceedings were purportedly setded by NEC Decision No. 172 of 2008 in 
which PPL was directed to pay K52 million in setdement of the claim. 

The Commission adopts the findings and views expressed above in respect of 
the fraudulent NEC Decision No. 172 of 2008. 

R) It is recommended that the Solicitor General assist PPL in ensuring 
that any claim based on the fraudulent NEC Decision No. 172 of 
2008 is vigorously and successfully defended 

(a) Processing of claim and Pay-out 

There has been no payment in respect of this matter. At this stage, this aspect 
does not arise for consideration. 

RECOMMENDATIONS 

From the evidence received by the Commission, the recommendations are as follow: 

Referral to the Attorney General 

Instruct Solicitor General not to entertain clearance on claim for payment based on 

fraudulent NEC Decision 172 of2008, and ensure any future claim 



627- 



on this matter is pursued in accordance with Claims By & Against the Stats 
Act 1996 

Referral to the Royal PNG Constabulary 

Joel Aundambui in seeking payment relying on fraudulent NEC Decision 1 72 of 2008 

Sam Joseph Kemaken for being an accomplice in seeking payment on behalf of his 
client, Mr Aundambui, based on fraudulent NEC Decision 172 of2008 

Referral to the Lawyers Statutory Committee 

Sam Joseph Kemaken for dishonourable, improper and unprofessional behaviour by 
seeking payment on behalf of his clients' based on a fraudulent NEC Decision 172 of 
2008 without conducting due diligence 



628- 



(b) Thomas Murowo 

Parties 

For the State 

Police 

University of Papua New Guinea 
Solicitor General 

For the Claimant: 

James Towa 
James Mobie Genaboro 
Paul Paraka Lawyers 
Blake Dawson Waldron Lawyers 

Others (if any) 

None 



Matter 



James Towa submitted a claim on behalf himself and the family of late Thomas 
Moruwo, one of the persons killed by Police during the 2001 student led anti- 
privatisation campaign 

The NEC approved the submission by then Minister for Justice to compensate the 
death of late Mathew Pawen and Thomas Moruwo. NEC submission stated that Kl 
million be approved and be paid equally amongst the relatives of the deceased. The 
submission was approved but the amount of compensation was to be determined 
following proper consultation 



A Deed of Release was signed on 3 September 2002 for the sum of K800,000.00 



629- 



Recommended Findings 

K800,000.00 is very excessive. No proper assessment of damages 

Claimants asked for compensation of K500,000.00 

Solicitor General failed to comply with NEC decision 

Solicitor General failed to take note (comply) with the CACC recommendations /advice 

to the NEC 

Mr Zachaary Gelu's actions were unreasonable and amount to a conflict of interest 

Other persons benefitted from this claim. The immediate family may have benefitted but 

most were received by some other persons. 

Terms of Reference 

Attached herewith is the copy of the Terms of Reference. This is a case which falls within the 
terms of the reference of this inquiry. The relevant and applicable terms of references in 
respect of this case are Terms of Reference No.s' 1 (i-iii, vii &ix) and 5(i-iii). Also attached are 
copies of abstracts of relevant statutory legislation and NEC Decisions pertinent to this case. 

Documents and investigations conducted at: 

Office of Clerk of Parliament (OCP) 
Office of the Secretary to NEC (SNEC) 
University of PNG (UPNG) 
Department of Finance (DF) 
Other Sources relevant this case (OD) 

Brief Facts /Evidence 



1 . This is a claim by one James Towa on behalf of the family of late Thomas 

Moruwo. James Towa claims to be the cousin of late Thomas Moruwo. It 

63 




is alleged that late Thomas Moruwo was killed by Police during the student led anti- 
privatisation campaign conducted between 21 to 26 June 2001. 

As a result of the UPNG student lead protest, it is believed that four people were 
killed, several persons injured and there was widespread destruction of properties. A 
Commission of Inquiry headed by Justice Sir Robert K. Woods was established to 
inquire into the student unrest. Annexure 4- OCP' is the copy of the Commission of 
Inquiry Report tabled in Parliament on 22 February 2002 by then Prime Minister Rt 
Hon. Sir Mekere Morauta. 

The Commission of Inquiry 7 Report highlighted that on 25 June 2001 the fifth day of 
protesting, the students' refused to present their Petition to a deputation of Ministers 
without the Prime Minister having to accept the petition himself. 

The Report indicated that the students after refusing to present their Petition went 
into destroying public properties and caused disruptions to the community along the 
University Campus vicinity and the main road past the University to Gerehu was 
blocked. Several vehicles were forcefully removed from their owners and destroyed. 

The Report highlighted that there were some non-students amongst the students and 
gun shots were allegedly fired within the campus. Couple of students were believed 
to be seeing holding firearms. 

Police were called in to quell the situation. However the mass of students together 
with some non-students took their frustration out on the Police by throwing missiles 
and petrol bombs. The Police having realised of being outnumbered by the frenzied 
mob fired their rifles into the air. In the process some students were hit by shotgun 
pellets and fell injured and there were two cases of mortally wounded. 



631- 



The Report further revealed that on 26 June 2001 the students and their supporters 
continued to destroy or loot properties and also attacked shops, which was spurred 
by rumours of fatal confrontation at the University Campus the previous day. Police 
resources were stretched throughout the city to disperse crowds assembling to further 
protest. Serious confrontations were reported around the Waigani area resulting to a 
police barracks building being set alight and destroyed, two police were injured by 
thrown missiles and several people injured by gunshot pellets. 

Several witnesses giving evidence in the Commission of Inquiry made references to 
two people being allegedly killed on 26 June 2001. However the Report stated that no 
relatives or friends came forward before the Commission of Inquiry to confirm the 
deaths. As such Justice Sir Woods in his summary of the Report concluded only two 
deaths. 

Annexure '2-UPNG' are copies of relevant documents provided by University of 

PNG Registrar, Mrs Jennifer Popat as requested by the Commission to confirm the 

legitimacy of the following: 

number of students killed 

names of the students killed 

documents proving the alleged killed students' registration with the University 

at the time of death 

other relevant documents 

The documents provided only confirmed Simon Noki and Steven Kil as the only 
legitimate students killed during the protest. Records of the other UPNG institutions 
in respect of EduAdmin (formerly Centre of Distance Education) and Open College 
also reveal that the claimant was not registered with them. 



632- 



Significant reference should be made to the letter dated 28 June 2001 by Professor 
Mathias Sapuri Executive Dean School of Medicine and Health Science UPNG 
addressed to the Vice Chancellor, Professor Leslie Eastcott In the letter Professor 
Sapuri reports a list of the deaths and injuries sustained during the unrest, which was 
confirmed by himself and Dr. Kaptigau senior surgeon at Port Moresby General 
Hospital. The letter is pertained to part of the annexure '2-UPNG'. 

The deaths or fatally wounded are identified in the list are as follows: 
Steven Kil - UPNG student from WHP. Died prior to arrival 

at PMGH from chest gunshot wound 
Simon Noki - UPNG student from WHP. Died in operating 

theatre from chest gunshot wound. He was in severe 

haemorrhagic shock. 
Thomas Maino - Not a student from Asaro EHP. Died prior to 

arrival at PMGH from gunshot wound. 

Mathew Pagun - Not a student from WNB. Admitted with left 

chest gunshot wound. Arrested from internal bleeding and 

fortunately responded to resuscitation and later had a left 

pneumonectomy. He is in ICU in critical condition. 

Note that the claimant's second name was spelled as Maino and not Moruwo as 
identified in this claim. 

On 23 April 2002 the then Minister for Justice, Hon. Puri Ruing, MP filed a Policy 
Submission No. 94/2002 to NEC. The submission was made to advise 
compensation claims lodged by the relatives the students allegedly killed by Police 
and sought NEC approval for compensation payments. Annexure '3-SNEC is the 
copy of this Policy Submission. 



633- 



The Policy Submission recommended NEC to approve and direct the Secretary for 
Treasury to make ex-gratia payment of Kl million to be equally shared between the 
next of kin of the late Simon Noki and Steven Kil. 

On 29 April 2002 the Central Agencies Coordination Committee in its Meeting No. 
15/2002 Paper No. 2.1.1 deliberated on Policy Submission No. 94/2002 and advised 
NEC that the claim of the dead students' relative was knocked out of court and hence 
the State should not concede liability as there was no basis to make the ex-gratia 
payments. In addition the Solicitor General was cited to having advised against the 
payment as the amount recommended was excessive and the law does not allow this 
payment. Where the State was to admit liability the appropriate amount would have 
to be K50,000.00 up to Kl 00,000.00. Annexure '4-SNEC is the copy of the CACC 
Meeting No. 15/2002 Paper. No. 2.1.1. 

Following the CACC advice, on 2 May 2002 NEC in its Decision No. 142/2002 
Special Meeting No. 19/2002 agreed to make ex-gratia payments to the parents of the 
two deceased students. It was decided that the Prime Minister in consultation with 
the Minister for Privatisation & Corporation and Justice & Attorney General will 
determine the level of the ex-gratia to be paid in consultation. Annexure '5-SNEC is 
the copy of the NEC Decision No. 142/2002 Special Meeting No. 19/2002. 

No further correspondence were received by the Office of the Secretary to NEC to 
ascertain the Prime Minister's decision on the level of ex-gratia payments made to the 
two deceased students' parents. However the Commission's review of the 
Department of Finance cash book listings revealed the following: 

Steven Kil — no payments noted 

Simon Noki - K300,000.00 on 9 May 2002 on cheque ref# 638770. 



634- 



Despite the findings of the Commission of Inquiry, UPNG Administration and the 
Minister for Justice and Attorney General having confirmed that Thomas Moruwo 
was not a student at the time of his death and NEC having endorsed to pay ex-gratia 
to only two students. The Solicitor General, Zacchary Gelu in his letter dated 18 
September 2002 to the then Acting Secretary for Department of Finance, Thaddeus 
Kambanei advised that Thomas Moruwo was one of the deceased students. Clearly, 
Mr Gelu mis-lead the Finance Secretary. Annexure '6-DF' is the copy of this letter. 

Parts of the said letter reads (quote) as follows: 

"...The UPNG students leadprotest against Government Privatisation program in June 2001. The 
four (4) students were shot dead by Police. The National Executive Council have already approved and 
settle payment for two (2) students from Mount Hagen but not Thomas Moruwo and Mathew 
Pawenfor Compensation claim. 

Parties decide to negotiate a settlement and agreed to settle at K800,000. There will be no further 
claims on this matter... 

Following the death of Thomas Moruwo, sometime in November 2001 a letter of 
demand was addressed to the Prime Minister and the UPNG SRC President seeking 
compensation. They demanded that K500,000.00 be paid by the State whilst the 
other K500,000.00 be paid by the UPNG SRC body (or the UPNG). A second letter 
of demand was again addressed to the Prime Minister on 10 th May 2002 requesting 
approval of K500,000 or an the Government (State) offered to the two UPNG 
students. 

On 20 th August 2002, another letter of demand was addressed to the Solicitor General, Mr 
Zachaary Gelu stating (quote), "...Our demand for ¥500,000.00 still stands or we would consider 
accepting an amount the Government would offer to the two Western Highlanders already approved ly 
the NEC." 



635- 



A Deed of Release was signed on 3 September 2002 for the sum of K800,000.00. 

Annexure 7-DF for copy of the Deed of Release. The parties involved in the signing 

of the Deed of Release are as follows: 

Releasor - James Towa acting for Thomas Moruwo. 

Releasee - Zacchary Gelu being the Solicitor General 

So far K7 10,000.00 has been paid. 

The following persons were called to give evidence in respect of this claim. They are:- 
James Mobie Genaboro; 
James Towa; 
Francis Kuvi; 
WaiHerumaho; 
Thaddeus Kambanei; ix. John Kawi. 

Evidence-James Mobie Genaboro 

Mr Genaboro was engaged by the claimant, James Towa to assist pursue the claim. 
He is not related to the deceased or the claimant. Asked how is he (Genaboro) related 
to the deceased, he answered:- 

"A: In fact I am well known in Daulo. Because 1 am a Public Servant and they know who I am, the 
relatives in here found it very difficult to communicate, to get through into Waigani. They are 
finding it very difficult so even though they wrote their petition to the Prime Minister, no 
response were forthcoming. 

Q: You mean this is the petition, the first — 



636- 



A: The first one. 

Q: Yes, it is dated November200 1 ? 

A: Yes. So in one of my campaigns while I was up in upper Asaro, I met the relatives there, they asked 
for me and I said I will look into it and that is how I got myself involved after the voting. That 
is why I came down and 1 started making contacts, enquiries. 

Q: So you are not related by blood in anyfamily connection? 

A: No." 

It is clear that apart from James Towa (claimant) who holds himself out as the 
brother of deceased, all the persons who had signed the petition are not related to the 
deceased but are said to be from the same village. Asked about their relationships, he 
answered:- 

j2- Then you are saying James Towa, community church leader, Morata, and you say James Towa - 
what is James Towa's relationship to the deceased? 

A: He is the deceased's blood brother. 

Q: You mean to say thy share the same mother and father, is that correct? A: Yes. 

Q: The otherfour are allfrom the same village, but you cannot say whether they were related by blood, 
that is fine. I also note from some of the documents that Mr Thomas Murowo was described as being 
married? 



637- 



Asked if the deceased, he fksdy answered "yes" but later stated that bride price was no 
paid and they were just living together. He did not know the name of the wife and 
further stated that they had no children. 

Asked as to why the deceased Thomas Moruwo and James Towa (claimant) had 
different surname although they come from the same parents, he answered, "...I do 
not know, I cannot explain." 

In relation to the assessment of damages to be paid, that is how was the figure 
K500,000.00 arrived at? He answered there was no method of calculation but a 
person had died. Mr Genaboro was further asked:- 

"Q.I am curious to see that you are askingfor KJOO, 000, jet Mr Gelu signed a deed to say K800, 000. 
Why was that an increase oj ¥300, 000, you only asked for ¥500,000? 

A: No, we askedfor¥1 million. 

THE CHAIRMAN: Your letter of 20 August says, "we are demanding for ¥300,000, still stands 
and that we would consider accepting an amount tk government offered to the other two already approved 
by the NEC. " That was ¥300,000. So you were askingfor ¥300,000 and even if you did not know, 
you are saying we would accept whatever the NEC approved. So how did it jump to ¥800,000? 
A: Through ourpetition we askedfor ¥300,000 each from the State. 

j): Butyou were working for the Prime Minister's Department, you know tk difference between the 
students union at University and the Government, that is not the -you said ¥300,000. In other words 
you are going to take it on both accounts. When you went to Mr Gelu, you are still writing in your letter 
¥300,000. You are not 



638- 



saying, by the way you are responsible/or the students as well at the University. 
How did itjump from K500,000 to K800,000? 

A: We asked for a million in ourpetition, K500,OOOfrom JTRC President — 

Q: We have moved on from the petition, the petition is way back. From the time 
you were talking to Gelu, it was 20 August, September coming up. You are about 

to get paid out and you still talking about KSOO,000,you are not talking 

about millions anymore. 

A: We also said K500,000 or any amount that the government would offer to the 
two Western . 



Q: What did thy offer to the two Western Highlanders? 

A: I do not know so I assume that the Western Highlanders were probably 
paid a million. 

0: Thy were not. 

MK KASSMAN: So thejumpfrom K500,000 to K800,000,you cannot explain? 

A: We were as king for any amount that the government would offer. 
Q: Anything? 

A: Any amount that would apply to the Western Highlanders. So I assumed, if 
we were offered K800,000 and then probably the Western Highlanders were offered 
K800,000. 

Q: Did Mr Gelu invite you to ask for more? 

639- 



A: No, he never. Wefoughtfor it, the relativesfoughtfor it to get what we wanted. 

Q: Did he ever tell you why he was agreeing to pay K800,000 and not K500,000.00? Did Mr Gelu 
ever tell you why he was going to commit tk State to K800,000 and not K500,000, which is what you 
have claimed? 

A: As I have said, we really fought to get what we wanted apart from what we believe the Western 
Highlanders were already paid. So wefoughtfor it and eventual^ we agreed to that K800,000 that was 
offered so we accepted it. Q: The Western Highlanders only got ¥300,000. 

A: Then we are happy. 

Q: Sorry? 

A: We are happy. I mean if they were offered ¥500,000 and we were offered ¥800,000 then what is 
wrong? We are happy because we are asking for 

compensation from the State. 

Q: By that I am making reference to what you said in your letter to the Trims Minister SirMekere and 
then to Mr Gelu. You said we will tab 

¥500,000 or whatever the Western Highlanders get, and they got¥500,000. 

THE CHAIRMAN: So on what you say, you should have got ¥500,000 becaussyou have being 
for ¥500,000. You said, "we will take ¥500,000 ", it is in your letter. A demand for ¥500,000 still 
stands or we will consider accepting the amount the government offered to the two Western Highlanders already 
approved by NECfor ¥500,000. So where did the actual ¥300,000 come from? I mean you went into the 
meeting wanting ¥500,000. 



640- 



A: As we said we lost a life and we have to - we fought with Mr Gelu am 



Q: There was no incentive offered at all to up the price orjou did not get a bit more because you had an 
agreement to pay out other people? 

A: No Commissioner. 

Q: You see, the Commission of Inquiry is looking into how it happened and we know that the NEC 
approved K500,000for each student, not for anybody else so there was no NEC decision that said 
K500,000for non students. So we ask the questions of the Solicitor General's office, why thy are settling 
at allfor anybody outside of the NEC approval, and we asked the Solicitor General, why this 
K300,000 more as well. So we are askingyou the same question and you do not seem to have come up 
with any answer either. So the process of the claim does not look very good, does not look as though 
i followed reasonable procedures. Suddenly there is a K3 00,000 gap which nobody seem to quite 
understand - can explain. 

A: As I have said in our petition, we asked for K1 million. 

Q: Hutyou did not askforKI million from the State? 

A: No, in our first petition. 

Q: I know but even then you did not ask from the State. 

A: We wrote to SirMekere because of the NEC decision that any amount thy offered to the Western 
Highlanders, and we believed that K800, ,000 is what was offered to the Western Highlanders. 

MRKASSMAN: Who offered that? 



641- 



A: The State. 

Q: Who? 

A: Government. 

Qj Who, a person? 

A: The NEC. 

THE CHAIRMAN: Who offered the K800,000 toyou? 

A: The Solicitor General of Papua New Guinea. 

MR KASSMAN: You mean Zacchary Gelu? 

A: Yes. 

Q: He offered K800, 000? 

A: Yes. 

Q: Did he offer that in writing? 

A: No the deed of release. 

Q: Sony, before jou signed the deed, you had a discussion? 

A: We had a discussion, we had to meet to fight to pursue our claim. 

Q: Who came up with thefigure ofK800,000? 



A: We agreed with the Solicitor General because we were askingforKI million. 

Q: Mr Genaboro, whoput forward the figure K800, 000, didyou put it forward, did Mr Gelu put it 
forward? 

A: Mr Gelu for K800,000. 
Q: He offered K800, 000? 

A: Yes." 

Mr Genaboro confirmed that K7 10,000.00 was paid. About K80,000.00 was paid to 
or received by Mr Genaboro for what he claimed as services provided to the 
claimant. 

It is submitted that Mr Genaboro was not sure of most of evidence in relation to the 
claimants (i.e. persons who spearheaded the claim) relationship to the deceased. On 
most occasions he appeared to assume and was asked by Counsel not to assume 
provided evidence that he is aware. He also was evasive. Further, it is clear from the 
evidence that Mr Genaboro was actively used to pursue the setdement because of the 
various positions he held within the public service. He was instrumental in pursuing 
the claim because of the people whom he know. This is confirmed by an email from 
Mr Ron Ganarafo, former member for Daulo electorate. 

It is submitted that the claim was pursued by persons not direcdy related to the 
deceased as such other persons like Genaboro benefitted from this claim. This is 
because when the matter was listed for hearing in Mt. Hagen, Wai Herumaho called 
the Commission expressing concern why the matter was listed for hearing Mt. Hagen 
and stated that all relatives of the deceased 



643- 



live here in Port Moresby and copies of ail the documents have already been 
provided so there was no real reason for the matter to be called in Mt. 
Hagen. 

Furthermore, Mr Genaboro confirmed that they asked for K500,000.00 or 
whatever that was paid to the two UPNG students. The K800,000.00 was 
offered by Mr Gelu. The claim should be referred to the Police for further 
investigation as clearly, persons directly related to the deceased never 
benefitted from the claim. If they did ever benefitted, it would be minimal 
as most of the monies were paid to persons not directly related for instance 
Mr Genaboro admitted receiving about K80,000.00. It is submitted that Mr 
Genaboro received more than K80,000.00 because he appeared he evasive 
and further he was not comfortable answering the question. 

Evidence -James Towa ("claimant") 

James Towa is the claimant. He advised that the deceased was his small 
brother. Asked why there was a difference in the surname of the deceased 
and his, he answered:- 

"Q: Sorry, full name of jour father? 

A: TongiMurowo. 

Q: The full name of jour mother? You said your brother's name, the deceased is 

Thomas Murom and jour name is James Towa. Why is it that, thatjou htm 

two different surnames? 

A: Mj names are James and Towa is my grandfather's name. They named nt 
after mj grandfather, my old man. Thy put his name. My name is James, Tow\ 
is mj grandfather and he is already dead. 



Q: What about Thomas'? Thomas's surname is Murom? A: Thomas 

Murowo, is my father. " 

It is submitted that when questions were asked in relation to the names of his father, 
mother, small brother, James Towa appeared confused. It is submitted that this is a 
claim pursued by persons (including James Towa) who are not even direcdy related to 
the deceased. He stated that there are only three of them, James, late Thomas and 
Towa Dongi. It is submitted that this names are all fabrication and appears to be no 
real connection with the deceased. 

James Towa confirmed that he had no meetings with Mr Gelu. The only meeting was 
when he went to sign the deed of release. Mr Genaboro in his evidence stated that he 
met Mr Gelu about 3 — 4 times. This confirms that Mr Genaboro was the person 
who actively pursued the matter resulting in the payments. 

James confirmed that some of the cheques were collected direcdy from the Finance 
Department, from one Boas Hembehi an officer with Finance Department. 

It is evident from the evidence of James Towa that other persons benefitted from the 
payments received as he was not able to properly account for the monies received. 
This resulted in the difference between James Towa and Wai Herumaho. 

Evidence — Wai Herumaho 



645- 



Wai Herumaho stated that the late Thomas Moruwo and him are first cousins. Wai's 

evidence contradicts the evidence of James Towa (and Genaboro). Theyare:- 
James said late Thomas and him are blood brothers (one father and one 

mother), but Wai said they are cousins not blood brothers; 

James said they were only three in the family, i.e. himself, late Thomas and 
Towa Dongi, small brother living in the village. But Wai's evidence is that late 
Thomas had only one brother, James Murowa (not Towa Dongi, confusing 
names) and he lived in 

the village; 

Wai said late Thomas has some sisters but they may have all got married and 

are currently live in the village. Again contradicting evidence by James that there were 

no sisters only three of them, contradictory; 

Wai stated that Genaboro received about K100,000.00. This confirms our 

submission that Mr Genaboro was evasive and looked un-easy when answering the 

question. It is submitted that Mr Genaboro received K100,000.00 (or more) and not 

IC80,000.00. Mr Genaboro may have mislead the Commission as such was not a 

truthful witness. 

It is submitted that the claimants in this case are not direcdy related to the deceased. 
The question is how can you mix up/confuse the names of your brothers, sisters, 
cousins, father, and grandfather. Clearly, all this persons were not related to the 
deceased. It may have been the case that the deceased was living with the Asaro 
(Goroka) community at Morata during his demise. The claimants took it up to make 
a claim without the knowledge of the immediate relatives. 

Mr Herumaho stated that he instructed Narokobi Lawyers to stop any further 
payments to James Towa or otherwise appoint Wai Herumaho instead of James 
Towa as the claimant. As a result, a Memorandum of Understanding was signed 
between Wai Herumaho and James Towa 



646- 



effectively replacing James Towa as the claimant. Mr Herumaho was asked 
about the MOU. 

"Q] Mr Herumaho, I will refer you to the memorandum of understanding. During signing of this 
document, the memorandum of understandings did the lawyer explain to you - did you 
understand the contents of this memorandum of understanding? 



A: Yes. 



jQ: Did the lanyer explain to you? 

A: Yes, he did. 

Q: What was the basisfor entering into this memorandum of understanding? Sorry, Mr Herumaho for 
purposes of Mr Geroro to translate, you will have to speak more or less in sequence. Speak 
then Mr Geroro can have the time to translate. 

A: This MOU was to basically removed fames from pursuing the claims. So whatever monies that were 
received from Department of Finance would then be distributed. So this MOU was basically 
to remove James from pursuing the claim on our behalf so we could deal with the claims in 
person. 

Q: What was the basis to remove James from pursuing this claim? 

A: The monies that were paid by Finance were not paid out to the rightful beneficiaries. So by way of 
illustration K200,000 was paid out but only K1 00,000 was received by the intending 
beneficiaries or the rightful beneficiaries. That was the reason why we had to remove James 
from pursuing the claim so that we could recover the balance of the entitlements outstanding. " 



647- 



There is sufficient evidence to show that other persons (persons not directly related to 
the deceased) benefitted from this claim as such the matter be referred to the Police 
for further investigations. This is a clear case were the relatives or families of the 
deceased live in the village whilst some other relatives or distant relatives take 
advantage of the circumstances to unjustly enrich themselves. It could amount to 
fraud. 

Mr Francis Kuvi in evidence basically stated that he had no knowledge of this claim 
nor did he have any carriage of this matter whilst been employed by the Solicitor 
General's Office. 

It is clear from this case that the National Executive Council ("NEC") played a major 
part in the settlement of this matter. It may be a political decision. It is submitted that 
clearly this is a dependency claim. The laws adequately address issues arising from 
dependency claims. In this case, it is submitted that the NEC should not interfere 
with the work of the relevant State agencies, such as the Solicitor General's Office 
and Public Curators Office perform their roles in such circumstances. 

John Kawi in his evidence also commented that this was a dependency claim and the 
figure proposed in the NEC submission was way above the amount awarded in a 
dependency claim. When asked what he knew about the claim, Mr Kawi stated 
(quote, only part):- 

". Sol said, until I am satisfied I am sorry but this is one instance where I will haw 

to defy the NEC direction to settle for ¥500,000. I made that very clear. I said I mil not settle this for 
K500,000 because although I sympathise with the death of the students which was at the hands of police, 
we also got in touch with police to give us instructions on this. Assuming that police would be responsible, 
this was the line I was taking that we do not settle the amount, these two deaths in the amount of 
¥500,000 each. Mj thinking was that it must be properly calculated using dependeny claims. As a 



648- 



dependency claim using the three per cent tables, if it was not a dependency 
meaning if the students who died did not have any families on their own, kids on 
their own, this at its best could be treated as a contingent type of customary 
dependency. That is how I viewed it and so I made afile notation on this. It is true 
there was no court proceedings issued in these two matters. But my file notation I 
recall was that these matters must be looked at from the line I was advocating and 
so that is the reason why I said I will defy NEC instructions to settle at 
K500,000 each. That is my only against in this matter. A.s you pointed out Gelu, 
I do not know how he could justify this but he comes in and settles it from an 
amount higher than the NEC directive." 

In regards to payments made, Mr Thaddeus Kambanei stated that it would be unusual 
to change the name of payee half way through or that is after some payments had 
already been made, because once the name of the payee is changed the "system" 
cannot pick-up how much has so far been paid in respect of the same claim the 
payments have been made. 

Mr Kambanei was asked:- 

"Q: In relation to obviously the same incident was the claim of Thomas Murowo, and again here the 
deed of release signed this time by a James Towafor Thomas Murowo. The records - again the 
deed of release for it was for a sum of K800,000. You can see from the sheet that we have 
handed over and in addition to that what is stated in the summons itself, in this case it was 
settlement again for K800,000. The records of the Department of Finance indicate that the 
sum of only ¥30,000 has been paid to Thomas Murowo. Again, I note here the payee on the 
cheque is the deceased person himself. That again would be strange or unusual issue of the 
cheque. 

A: Correct. It is very unusual, yes. " 



649- 



Findings: 



James Towa is not the blood brother of the deceased nor is he direcdy 
related to the deceased. 

James Mobie Genaboro, Wai Herumaho and others are not direcdy related 
to the deceased. 

Other persons benefitted from this claim. 

Deceased is not a UPNG student. 

No proper assessment of damages. Damages awarded by Mr Gelu is very 
excessive. 

Claimants asked for K500,000.00. 

Zacchary Gelu failed to properly assess the claim. Mr Gelu acted in 
contravention of the NEC decision. Further, Mr Gelu acted beyond his 
powers because the claimants only asked for K500,000.00 yet he offered 
IC800,000.00 (K300,000.00 more than what was claimed). 

James Mobie Genaboro used his influence to pursue this claim. 



Recommendations 

1 . Matter be referred to Police for further, investigations as other people 
benefitted from this claim. 



650- 



James Towa, James Mobie Genaboro , Wai Herumaho and those persons involved in 
pursuing this claim be referred to Police for further investigations. 

Zacchary Gelu must be referred to the Police Fraud Squad for possible investigation 
and charges to be laid. Further, Me Gelu be referred to the Lawyers Statutory 
Committee for unprofessional conduct. 

Since all claims against the State are reviewed and sanctioned by the a Solicitor 
General, it is recommended that all payments processed by the Department of 
Finance should be forwarded to the Office of Solicitor General to effect settlement 
to respective claimants/plaintiffs or their agents. 

Department of Finance prior to processing any payments being advised by the 
Solicitor General should request for the Solicitor General officially authenticated/ 
sealed documents as in the cases of Consent Orders, Certificate of Judgements and 
Deed of Releases. 

All payments requested by claimants or their legal representatives and or agents 
should be forwarded to the Office of the Solicitor General for authentication prior to 
being processed for setdement. 

Immediate instructions be given to Finance Department to stop any further or 
balance of the payments. 

Solicitor General file proceedings to set aside the Deed of Release as soon as 
possible. 



9- Mr Gelu be banned from ever holding onto or been appointed to any public service 

position in the future. 



651 



Index of Relevant Documents 



OCP - Copy of the Commission of Inquiry Report into the 

2001 UPNG student-led unrest. 
UPNG - Copies of confirmatory documents provided by 

UPNG Registrar as requested. 
SNEC - Copy of Minister for Justice, Hon. Puti Ruing, MP 

filed a Policy Submission No. 94/2002 to NEC 
SNEC - Copy of Central Agencies Coordination Committee in 

its Meeting No. 15/2002 Paper No. 2.1.1 
SNEC - Copy of NEC Decision No. 142/2002 Special Meeting 

No. 19/2002 
DF - Copy of letter dated 1 8 September 2002 from Solicitor 

General to Acting Secretary for Department of 

Finance. 
DF - Copy of the signed Deed of Release 

DF - Copy of FF3 form 

DF - Copy of FF4 form 



(c) Mathew Pawen 

A. Parties 

For the State 
Police 

University of Papua New Guinea 
Solicitor General 

For the Claimant: 
Josepha Pawen 
Tony Pawen 
Patterson Lawyers 

a. Others (if any) 
None 



B. Matter 



Claim by one Josepha Pawen for and on behalf of her family for the death of Mathew 
Pawen (younger brother) killed by the Police during the UPNG student unrest. 

The NEC approved the submission by then Minister for Justice to compensate the death 
of late Mathew Pawen and Thomas Moruwo. NEC submission stated that Kl million be 
approved and be paid equally amongst the relatives of the deceased. The submission was 
approved but the amount of compensation was to be determined following proper 
consultation. 



No court proceedings were taken out against the State. 

663- 



A Deed of Release was signed on 3 September 2002 for the sum of K800,000.00. 



Finding s 

K800,000.00 is very excessive. No proper assessment of damages 

Solicitor General failed to comply with NEC decision 

Solicitor General failed to take note (comply) with the CACC recommendations /advice 

to the NEC 

Mr Zacchary Gelu's actions were unreasonable and amount to a conflict of interest 

Gilbert Maki and Zacchary Gelu actions amount to unprofessional conduct 
Patterson Lawyers costs issued to Tony Pawen are very excessive 

Patterson Lawyers and Zacchary Gelu benefited from the claim 

Terms of Reference 

Attached herewith is the copy of the Terms of Reference. This is a case which falls within the 
terms of the reference of this inquiry. The relevant and applicable terms of references in 
respect of this case are Terms of Reference No.s' 1 (i-iii, vii <<&ix) and5(i- iii). Also attached are 
copies of abstracts of relevant statutory legislation and NEC Decisions pertinent to this case. 

Documents and investigations conducted at : 

Office of Clerk of Parliament (OCP) 
Office of the Secretary to NEC (SNEC) 
University of PNG (UPNG) 
Department of Finance (DF) 



654- 



• Other Sources relevant this case (OD) 

Brief facts /Evidence 

This is a claim by one Josepha Pawen on behalf of her family for the death of Mathew 
Pawen. Mathew Pawen was shot by the Police during the UPNG student led anti- 
privatisation campaign conducted between 21 to 26 June 2001. 

Following the Student un-rest, a Commission of Inquiry headed by Justice Sir Robert K. 
Woods was established to inquire into the student unrest. Annexure '1-OCP' is the copy 
of the Commission of Inquiry Report tabled in Parliament on 22 February 2002 by then 
Prime Minister Rt. Hon. Sir Mekere Morauta. 

The Commission of Inquiry Report highlighted that on 25 June 2001 the fifth day of 
protesting, the students' refused to present their Petition to a deputation of Ministers 
without the Prime Minister having to accept the petition himself. 

The Report indicated that the students after refusing to present their Petition went into 
destroying public properties and caused disruptions to the community along the 
University Campus vicinity and the main road past the University to Gerehu was 
blockaded. Several vehicles were forceful removed from their owners and destroyed. 

The Report highlighted that there were some non-students amongst the students and 
gun shots were allegedly fired within the campus. Couple of students were believed to be 
seeing holding firearms. 

Police were called in to quell the situation. However the mass of students together with 
some non-students took their frustration out on the Police by throwing missiles and 
petrol bombs. The Police having realised of being outnumbered by the frenzied mob 
fired their rifles into the air. In the process 



655- 



some students were hit by shotgun pellets and fell injured and there were two cases of 
mortally wounded. 

The Report further revealed that on 26 June 2001 the students and their supporters 
continued to destroy or loot properties and also attacked shops, which was spurred by 
rumours of fatal confrontation at the University Campus the previous day. Police 
resources were stretched throughout the city to disperse crowds assembling to further 
protest. Serious confrontations were reported around the Waigani area resulting to a 
police barracks building being set alight and destroyed, two police were injured by 
thrown missiles and several people injured by gunshot pellets. 

Several witnesses giving evidence in the Commission of Inquiry made references to two 
people being allegedly killed on 26 June 2001. However the Report stated that no 
relatives or friends came forward before the Commission of Inquiry to confirm the 
deaths. As such Justice Sir Woods in his summary of the Report concluded only two 
deaths. 

Annexure '2-XJPNG' are copies of relevant documents provided by University of PNG 
Registrar, Mrs Jennifer Popat as requested by the Commission to confirm the legitimacy 
of the following: 

number of students killed 

names of the students killed 

documents proving the alleged killed students' registration with the University at the 

time of death 

other relevant documents 

The documents provided only confirmed Simon Noki and Steven Kil as the only 
legitimate students killed during the protest. Records of the other UPNG institutions in 

respect of EduAdmin (formerly Centre of Distance Education) 

65 
6 



and Open College also reveal that late Mathew Pawen was not registered with them. 

11. Significant reference should be made to the letter dated 28 June 2001 by Professor Mathias 
Sapuri Executive Dean School of Medicine and Health Science UPNG addressed to the 
Vice Chancellor, Professor Leslie Eastcott. In the letter Professor Sapuri reports a list of 
the deaths and injuries sustained during the unrest, which was confirmed by himself and 
Dr. Kaptigau senior surgeon at Port Moresby General Hospital. The letter is pertained to 
part of the annexure '2-UPNG'. 

1-2. The deaths or fatally wounded individuals are identified in the list are as follows: 

Steven Kil - UPNG student from WHP. Died prior to arrival at PMGH 

from chest gunshot wound 
Simon Noki - UPNG student from WHP. Died in operating theatre from 

chest gunshot wound. He was in severe haemorrhagic shock. 

Thomas Maino — Not a student from Asaro EHP. Died prior to arrival at 
PMGH from gunshot wound. 

Mathew Pagun - Not a student from WNB. Admitted with left chest 

gunshot wound. Arrested from internal bleeding and fortunately 
responded to resuscitation and later had a left pneumonectomy. 
He is in ICU in critical condition. 

13. Note that the claimant's second name was spelled as Pagun and not Pawen as identified in 
this claim. It may have been a typographical error. 



657- 



Following the death of late Mathew Pawen, as mentioned above, Josepha Pawen issued 
what appeared to be a Section 5 notice pursuant to the Claims By and Against the State 
Act 1996 to make a claim against the State for the death of Mathew Pawen. Mr John 
Kawi, then Solicitor General acknowledged receipt of the section . 5 notice and advised 
Josepha Pawen that he would seek instructions and provide a response by way of a letter 
dated 25 th January 2009. 

Letters were also written to the then Prime Minister Sir Mekere Morauta and Mr 
Augustine Molongos, then UPNG SRC President for some form of compensation to 
assist with the funeral arrangements etc. It must be noted that in all the letters seeking 
compensation and the notice of claim lodged with the Solicitor General, no amount was 
sought by the claimant. During evidence, Josepha Pawen was asked if any amount was 
proposed and she stated that "...no amount was proposed." 

On 23 April 2002 the then Minister for Justice, Hon. Puri Ruing, MP filed a Policy 
Submission No. 94/2002 to NEC. The submission was made to advise compensation 
claims lodged by the relatives the students allegedly killed by Police and sought NEC 
approval for compensation payments. The submission also noted that apart from the two 
UPNG students killed there were also two non-students, presumably referring to 
Mathew Pawen and Thomas Moruwo. However, the NEC submission stated that no 
compensation demand was received from the relatives of the two non-students. The 
submission noted that the relatives of the two UPNG students demanded K800,000.00. 
Annexure '3-SNEC is the copy of this Policy Submission. 

The Policy Submission recommended NEC to approve and direct the Secretary for 
Treasury to make ex-gratia payment of Kl million to be equally shared between the next 
of kin of the late Simon Noki and Steven Kil, the two UPNG students. 



658- 



On 29 April 2002 the Central Agencies Coordination Committee in its Meeting No. 
15/2002 Paper No. 2.1.1 deliberated on Policy Submission No. 94/2002 and advised 
NEC that the claims of the dead students' relative was knocked out of court and hence 
the State should not concede liability as there was no basis to make the ex-gratia 
payments. In addition the Solicitor General was cited to having advised against the 
payment as the amount recommended was excessive and the law does not allow this 
payment. Where the State was to admit liability the appropriate amount would have to 
be K50,000.00 up to Kl 00,000.00. Annexure '4-SNEC is the copy of the CACC 
Meeting No. 15/2002 Paper. No. 2.1.1. 

Following the NEC meeting, it was decided that the Prime Minister shall determine the 
level of the ex-gratia to be paid in consultation with the Minister for Privatisation & 
Corporation and Justice & Attorney General. Annexure '5- SNEC is the copy of the 
NEC Decision No. 142/2002 Special Meeting No. 19/2002. 

No further correspondence were provided by the Office of the Secretary to NEC to 
entail the Prime Minister's decision on the level of ex-gratia payments made to the two 
deceased students' parents. However the Commission's review of the Department of 
Finance cash book listings revealed the following: 

Steven Kil — no payments noted 

Simon Noki -K300,000.00 on 9 May 2002 on cheque ref# 638770. 

Despite the findings of the Commission of Inquiry, UPNG Administration and the 
Minister for Justice and Attorney General having confirmed that Thomas Moruwo was 
not a student at the time of his death and NEC having endorsed to pay ex-gratia to only 
two students. The Solicitor General, Zacchary Gelu in his letter dated 18 September 
2002 to the then Acting Secretary for Department of Finance, Thaddeus Kambanei 
advised that Mathew Pawen was 



659- 



one of the deceased students. Clearly Mr Gelu mislead the Finance Secretary. 
Annexure !6-DF' is the copy of this letter. 

22. Parts of the said letter reads (quote) as follows: 

"...The UPNG students lead protest against Government "Privatisation Program in June 
2001. The four UPNG students were shot dead by Police. The National Executive 
Council have already approved and settle payment for two (2) students from Mount Hagen 
but not Thomas Moruwo and Mathew Pawenfor Compensation claim. 

Parties decide to negotiate a settlement and agreed to settle at K800,000.00 There will be no 
further claims on this matter... 



Date 


No 


Ace 


Progrm 


Act 


Item 


Payee 


Details 


Ty 


Ref# 


Payments ] 

1 


25/1/03 


890402 


207 


4201 


4123 


135 


Mathew 
Pawen 


Part Pay.- SG 

1227/0 


CQ 


710215 


30,000.06 


4/4/03 


903047 


207 


4201 


4123 


135 


Mathew 
Pawen 


Reimbursement 
Chq.Co 


CQ 


716817 


30,000®! 


17/10/03 


940865 


207 


4201 


4123 


135 


Mathew 
Pawen 


Being Payment 
forO/ 


CQ 


736901 


30,000 00 


1/4/04 


972626 


207 


4201 


2107 


135 


Mathew 
Pawen 


Repl Chq. No. 
736901 


CQ 


774166 


30,000 GO 


25/5/04 


982007 


207 


4201 


2107 


135 


Josepha 

Pawen 

Suvu 


Replmnt 
chq#774166 a 


CQ 


779313 


30,000.66 


7/12/04 


11011 


207 


4201 


2107 


135 


Josepha 


O/S comp 


CQ 


797254 


300,000.® 














Pawen 


balance(dec 






— 














Suvu 










29/3/05 


1024803 


207 


4201 


2107 


135 


Mathew 

Pawen 

Suvul 


Pmt for o/s deed of 


CQ 


806532 


210,000® 


2/8/05 


1042763 


207 4 


201 


2107 


135 


Mathew 
Pawen 


O/S DOR claim 
Pmt 


CQ 


816796 


5Q&m 



Suvul 



Total 710,000.00 



A Deed of Release was signed on 3 September 2002 settling the claim for 
K800,000.00. The deed was not affixed with the seal of the Solicitor General's 
Office seal as required. Annexure '7-DF' for copy of the Deed of Release. The 
parties involved in the signing of the Deed of Release are as follows: 

Releasor - Josepha Pawen Suvulo acting for Thomas Moruwo. 
Releasee — Zacchary Gelu being the Solicitor General 

Following tabulate illustrates payments made to the claimants by Department of 
Finance as being abstracted from the electronic Cash Book listings provided: 

Annexes '8-DF', £9-DF' and '10-DF3' are the only supporting payment vouchers 
provided in the Department of Finance file. Note that annexes 8-DF and 10-DF 
are in respect of FF3 whilst annexure 9-DF consist of FF3 and FF4 for a payment 
of K300,000 which is marked as cancelled on the remittance advice. Despite the 
cancellation of this cheque, there is no reference on the Department .of Finance cash 
book listing highlighting such a cancellation in respect of this payment. 

Also note on annexure 8-DF that Thomas Moruwo being identified for payment of 
K30,000.00 is the other non-student allegedly killed by Police during the unrest for 
which the Solicitor General had also endorsed dependency payment of K0.8 million. 

Annexure 8-DF relates cheque ref# 710215 of K30,000.00 was made payable to the 
claimant/ plaintiff but annexes 9-DF and 10-DF3 are for cheques ref# 797254 of 
K300,000.00 and ref# 806532 of K21 0,000.00 both being made payable to 
Patterson Lawyers. 



661- 



Note that all settlement payments between 25 January 2003 to 1 April 2004 totalling 
K120,000.00 were made to the claimant during which time Zacchary Gelu was still the Solicitor 
General and the claimant had no legal representative. However the settlement payments 
between 25 May 2004 to 2 August 2005 totalling K590,000.00 were made payable to Patterson 
Lawyers, in which time Mr Gelu had apparently resigned as Solicitor General and was 
presumably a partner with Patterson Lawyers. As such the claimant also began using Patterson 
Lawyers as legal representative. 

Annexure '11 -DF' is the copy of the letter from the Solicitor General, Zacchary Gelu to the 
Secretary for Department of Finance dated 19 February 2003 advising that the cheque ref# 
710215 was not accepted by the Bank due to the misspelling of the name of the payee. 
However the Commission is unable to verify whether the Department of Finance had actually 
cancelled the cheque ref# 710215 and issued a replacement cheque. 

In spite of a total of Kl 20,000.00 being purportedly paid by the Department of Finance as 
verified in paragraph 28 above between January 2003 to May 2004, the Acting Solicitor 
General, Francis Kuvi (successor to Zacchary Gelu) wrote to the Secretary for the Department 
of Finance on 24 June 2004 advising clearance for settlement payment of K800,000.00 to be 
made payable to the claimant's lawyer, Patterson Lawyers Trust Account based on item 3 of 
the NEC Decision No. 150/2003. Annexure T2-DF' is the copy of the subject letter. 

Note that item 3 of the NEC Decision No. 150/2003 does not specifically relate to this case 
but declares the rescinding clause 10 of NEC Decision No. NG 07/2002. Clause 10 of NEC 
Decision No. NG 07/2002 directs no more out of court settlements by any State body or 
authority, including by the Attorney General and Solicitor General, without the approval of 
NEC, acting on CACC advises. 

On 14 December 2004 the Acting Solicitor General, Francis Kuvi again wrote a follow-up 
letter to the Secretary for the Department of Finance, reiterating the 



662 



settlement of Mathew Pawen's total claim of K800,000-00 as noted in paragraph 29. Mr Kuvi 
disputed this letter in evidence and stated that the letter was a fabrication (see paragraph 48 
below). Annexure '13-DF is the copy of the subject letter. 

Note that payments between 25 January 2003 to 1 April 2004 totalling Kl 20,000.00 were 
allegedly paid under the payee name Mathew Pawen whilst the payments between 25 April 
2004 to 2 August 2005 totalling K590,000.00 were allegedly paid under the payee name 
Mathew Pawen Suvulo. Such circumstances together with two different Solicitor General 
facilitating clearances of the same claim in totality during their respective terms of their 
appointment amounts to fraud. 

Apart from the material (documents) evidence received, evidence were received £tom:- 
Josepha Pawen Suvulo, claimant; 
Tony Pawen, claimant; 
Francis Kuvi, former Solicitor General; 
Zacchary Gelu, former Solicitor General; 
Michael Steven Wagambie, Principal M.S Wagambie Lawyers. 
John Kawi. 

Evidence - Josepha Pawen Suvulo ("Josepha") 

Josepha is the elder sister of late Mathew Pawen. Josepha confirmed having lodged her 
intention to make a claim against the State. Several letters were also written to the then Prime 
Minister Sir Mekere Morauta and the then UPNG SRC President, Mr Augustine Molongos. In 
evidence, she stated that no amount was proposed to the State (or in the letters written). 

It appears the amount of K800,000.00 was suggested by Mr Gelu as Josepha said she was not 
aware of how much she was claiming but at the material time, she 



663- 



admitted attending at Office of the Solicitor General and was asked to sign some documents 
which appear to be the deed of release. 

After the signing of the deed of release she was called to pick up a cheque for K30,000.00. The 
said cheque was presented at the bank but refused as such was returned to one John Sam an 
Officer with Finance Department. The cheque was written to Mathew Pawen (deceased) as 
such it was refused. Josepha stated that this happened about three times on all occasions, 
either the name was misspelt or it was made payable to a deceased person, Mathew Pawen as 
such all three cheques for the sum of K30,000.00 were all returned to one John Sam. This 
would mean a total of K90,000.00 was returned (i.e. K30,000.00 x 3 cheques). 

It was only on the fourth occasion when the cheque was written correctiy for the sum of 
K30,000.00 of which she received and deposited the cheque in her account In evidence she 
stated that was the only monies she received and was distributed amongst her families. 

Sometime later she was advised by Tau Tau from the Solicitor General's Office that a cheque 
of I<210,000.00 was collected by Patterson Lawyers. She attended at Patterson Lawyers asked 
to see Mr Gelu but on all occasions she was advised that Mr Gelu was not available. She then 
attended at Finance Department and obtained a copy of K21 0,000.00 cheque from one Boas, 
an officer with Finance Department The Cheque was made payable Mathew Pawen, C/- 
Patterson Lawyers and picked up by one Gabriel Dusava, a Consultant with Patterson 
Lawyers. 

In evidence, Josepha stated that she never gave instructions to Patterson Lawyers to act for 
her. As result, Josepha wrote a letter dated 28 th April 2005 to Jack Patterson of Patterson 
Lawyers threatening to refer the matter to the Law Society, Police and relevant Authorities. In 
the letter Josepha demanded that K21 0,000.00 be repaid forthwith. 

As a result Patterson Lawyers issued proceedings against Josepha for defamation. As a result, 

Josepha instructed M.S Wagambie Lawyers to defend her against the 

66 
4 



proceedings. In the meantime, M.S Wagambie Lawyers filed an application seeking to have the 
sum of K210, 000.00 be deposited into the National Trust Account pending determination of 
the entire proceedings. Mr Wagambie in his evidence confirmed acting for Josepha and the 
filing of the said application. Mr Wagambie confirmed that he had spoken with Mr Gelu to 
have the matter resolved out of court but never materialised. Mr Gelu had advised Mr 
Wagambie that he would call him for discussion on the possibility of an out court settlement 
proposal but never did so. The application together with the entire proceedings is still 
pending. 

Josepha confirmed that she received only K30,000.00. 

Evidence - Michael Steven Wagambie 

Mr Wagambie confirmed receiving instructions to act for Josepha on 14 June 2005. Mr 
Wagambie advised that on instructions, Notice of Intention to Defend and a Defence and a 
Cross-Claim was filed for the sum of K210, 000.00. An application was also filed to have 
K21 0,000.00 removed from Patterson Lawyers Trust Account and placed in the National 
Court Trust Account pending determination of the entire proceedings. 

In relation to the further conduct of the defamation proceedings and the application seeking 
to have the monies put in the National Court Trust Account, Mr Wagambie stated:- 

"...Even after we have filed the Notice of Motion, every time we go to court, the matter is either not on the 
list or the file is not in court. That has been the case up until about 2007, when I lost contact with my client 
but I actively, still have the file with me and so far as the instructions are concerned, I still have instructions 
to act for her, I have not filed a notice of ceasing to act as jet. That amount ofmony has not been returned to 
my client. Further, during the course of our going to court for the prosecution of the Notice of Motion, Mr 
Zacchary Gelu intimated to me and to my client which 1 relayed the information to my client that he 
intends to settle this matter out of court.... 



665- 



The terms of settling of the matter would be that he would refund the money to her and that he would 
withdraw the proceedings for defamation of character against her. Despite the suggestion, Chief 
Commissioner, nothing that eventuated to date. Not that I am aware of. If any, my client would have 
informed me. From the court's record up until now, our motion is still pending in court.... 

... The last time we communicated with Mr Gelu would be on 30 June 2006. If you look at their letter to 
my firm on 4 July, it says, 'We acknowledge receipt of jour letter of 30 June 2006, together with the notice of 
motion and affidavit and support filed on 29 June 2006 where the motion is fixedforbearing on 1 7 July. We 
have taken note ofparagraph 4 ofjou letter, we are happy to discuss this matter withjou to consider options 
to settle the matter. We are also considering to discontinue the proceedings, a matter, we will discuss together 
with you. " Formally, on record that would be the last communication. " 

In relation to payments received, Mr Wagambie confirmed that according to his 
instructions, his client (Josepha) had only received K30,000.00. Further, they (i.e. Mr 
Wagambie and Josepha) were not aware of any other payments apart from the IC30, 
000.00 she received and the K2i0,000.00 paid to Patterson Lawyers (subject of court 
proceedings). 

Mr Wagambie also expressed concern in relation to the conduct of Mr Gelu when the 
question was asked:- 

Q. Mr Wagambieyou mentioned something that Mr Gelu was the Solicitor General at that time when 
settlement was made and then when he moved over to Patterson Tanyers, it appears the file was then - he 
then took up the matter. You have any comments to comment on the manner in which — ? 

A: Yes, Ifeel in my own personal view, Ifeel this would be highly inappropriate Jot Mr Gelu to be 
requestingfunds to be diverted to the firm of Patterson Tanyers where he is part of, because prior to him 
joining Patterson Tanyers, he was with the office oftk 



666- 



Solicitor General, holding the position of Solicitor General, and therefore in my view, personal view, it would 

not be appropriate for such a thing to be done unless of course the funds have been properly acquitted or 

otherwise received and given to the beneficiaries of those who are entitled to receive the funds. Further, one 

thing to note would be that the funds went into was picked up directly from Finance Department and my 

years of practice, I understand that anyfunds that has to be by way of State settlement, would go to the office 

of the Solicitor General to be picked up by the claimant at the office of the Solicitor General In this 

particular instance, the cheque of K2 10, 000 was picked up at the Finance Department by one of their 

consultants called Gabriel Dusava, and in my view, I personally think that is not the proper way of doing 

things; that is not the proper way of doing things in the sense of accountability and as professionals, that is 

not a proper way of doing things, andMrGelu beingthe former Solicitor General knows this procedure very 

well" 

Evidence - Francis Kuvi 

Mr Kuvi gave evidence stating that he had no knowledge of the claim until he was 
appointed as Acting Solicitor General and upon receipt of a letter from Mr Suvulo, the 
National Statistician on behalf of Josepha following up on the claim. He advised that the 
deed of release was signed prior to his appointment as the Acting Solicitor General. 

Asked if he was the author of the letters to the Finance Secretary dated 24 June 2004 and 
14 December 2004, Mr Kuvi denied any knowledge of having drafted the letters sighting 
serious discrepancies and stating that his name and signature was forged. Further, Mr 
Kuvi stated that the assessment of K800, 000.00 may have been excessive. Furthermore, 
a search of the Solicitor General's file revealed that it had no copies of these two letters 
purportedly written by Mr Kuvi. It is submitted that the letters were a fabrication and 
certainly. 



667- 



Both of this letters were attached to the Affidavit of Zacchary Gelu filed on 17 June 
2005 in the defamation proceedings they (Patterson Lawyers) filed. It is submitted that 
the letters emanated from Patterson Lawyers as clearly the letters were drafted with a 
view to diverting all the payments to Patterson Lawyers Trust Account. The letter clearly 
stated, "...make the cheque of K8Q0, 000.00 payable to the claimant's lawyers, 
PATTERSON LAWYERS TRUST ACCOUNT...." The letter was never copied to 
Patterson Lawyers yet, Mr Gelu had a copy of the said letters. 

Furthermore, records show that some payments were already made, as such there was no 
basis at all to state that make a cheque of K800.000.00 payable to Patterson Lawyers. It is 
submitted that this was clearly an intention to defraud the State. As lawyers, in this case if 
the letter was written by Mr Kevin, he is required to confirm/ verify with his file as to 
the amount still outstanding and that could have been stated clearly as the amount still 
outstanding and not K800,000.00. It is submitted that the letter emanated from 
Patterson Lawyers. It is further submitted that Mr Gelu may have took with him copies 
of the Solicitor General's letter head. 

Evidence - Tony Pawen 

Tony Pawen is the younger brother of Josepha Pawen, the claimant. Tony stated that he 
gave instructions to Patterson Lawyers following his discussions with Zacchary Gelu as 
to how to go about following up on the balance of the payments from Finance 
Department. Tony stated that he was not happy with Josepha's handling of the first 
payment being K30,000.00 as such issued instructions to Patterson Lawyers. Asked if he 
had obtained the consent of Josepha before issuing instructions to Patterson Lawyers, he 
answered in the negative. Clearly, he had no lawful instructions as Josepha is deemed to 
be the claimant. Josepha initiated the claim from the outset on behalf of her family (i.e. 
including Tony Pawen). All the documents bear Josepha name. If it was a 



668- 



case of mishandling of K30, 000.00 it was a family issue that could be resolved amongst 
the Pawen family. 

It is submitted that Zacchary Gelu was instrumental in having Tony Pawen to issue 
instructions to Patterson Lawyers. Tony admitted that it was Zacchary Gelu ("hereafter 
known as 'Gelu") who advised him to see Patterson Lawyers. This is further confirmed 
by the fact that Tony Pawen lived with Gelu for three years during the time in which the 
claim was lodged and subsequent setdement of the claim by way of deed of release. 
Certainly, Gelu had an influence to remove the file without the consent of Josepha 
(claimant) . 

Tony confirmed that the only payment from the claim he is aware of is the payment of 
K30,000.00 paid/received by Josepha and K21 0,000.00 paid to Patterson Lawyers. Note 
that this is the payment (K210,000.00) that is the subject of court proceedings between 
Josepha and Patterson Lawyers, Gelu & Others. In evidence, Tony said he only received 
Kl 10,000.00. The balance, K100,000.00 was retained by Patterson Lawyers. 

The Kl 10,000.00 was paid in three lots, two cheques from Patterson Lawyers one for the 
sum of K37,000.00 (pay cash) and the other cheque for K70,000.00 pay Gelu Zacchary 
and Tony Pawen. K3000.00 was paid in cash to Tony Pawen. 

Tony stated that the K37,000.00 was cashed and pain into his personal account at 
Westpac Bank, Waigani. Asked what happened with the K70,000.00 cheque payable to 
Gelu and Tony Pawen he stated that it was paid into his personal account. Tony was 
asked that to have deposited into his personal account it certainly may have problems as 
it is made payable to two people (Gelu/Tony). He later stated that they (i.e. Gelu/Tony) 
had a "join bank account" at BSP Boroko. Asked what was Gelu's share from the 
K70,000 was. 00 he said Gelu did not receive anything. It is submitted that there is a real 
possibility that Gelu 



669- 



received some monies from this payments. This must be further investigated 
further as Tony seemed uncomfortable in the witness stand during question time 
when questions were asked along the issue of who benefited from the payments 
received'. 

56. During evidence, Tony provided a copy of a letter from the Lawyers Statutory Committee. 
Asked what was it about, he answered:- 

A: I wrote to the Statutory because of that K1 65,000, the cost of the (inaudible). J was not happy about the 
amount that is why I wrote to the lawyers Statutory Committee. 

Q: You were charged K1 65,220 by Patterson Lawyersfor their services? 
A: They were going to charge me that amount. 
Q. And that was the reason you — 



A: I wrote to the Lawyers Statutory i 

Q: As a result of 'your complaint to theluinyers Statutory Body, was the fees revised? Did Patterson lawyers 
say, put the fee down? 

A: Never. 



Q: So it is correct to say that as at today — 

A: I still them owe them that amount. 

jg: You still owe them K1 '65,220? 

A: Yes. 

670- 



Tony had not received any response from the Lawyers Statutory Committee in regard to 
his complaint. Asked what happened to the Kl 00,000.00 that was retained by Patterson 
Lawyers, Tony answered:- 

"A: K1 00,000 was in Patterson Lasers' trust account. I am not sure if that ¥100,000 is going to pay for 
this cost but what thy told me was that this K1 00,000 sitting in that trust account is going to be for my 
security and their security. Thy did not mention anything concerning the payment of their costs. 

Q: It is still in the trust account? 



A: Yes. 



Q: At Patterson Lanyers? Who toldyou that? A: Jack Patterson. " 

Tony advised that often he saw Jack Patterson instead of Gilbert Maki. 

In relation to some "other payments apart from K30,000.00 and the K21 0,000.00, Tony 
was asked:- 

"..Q: Apartfrom the ¥210,000 and the ¥30,000 which you are aware of brings the total to ¥240,000, 
are you aware of any other payments that have been made ly Finance to Patterson Lanyers or which 
were- 

A: Never. After that payment, we have not received any payment and I never know of any payments made. 



671- 



Q: Mr Pawen, as you may have heard during the course of hearing our record show 
that a total of K7 10,000 has been paid, that is including the K2 10,000 and the 
¥3 ! 0,000 which you are aware of. Do you still confirm — 

THE CHAIRMAN: K500,000 unaccounted for. Did you know that your family received¥500,000? 

A: No. 

f): It had been paid out. 

A: I never know of any payment after that K240,000. 

Q: If the extra K500,000 was made up, what are those cheque amounts? 

MR GORUA: Our records show that the first payment that was made was on 25 January 2003, the 
cheque number being 710215 for ¥30,000; second cheque was on 4 April 2003, 
cheque number 716817 for K3 0,000; third cheque 17 October 2003, cheque number 
736901 for ¥30,000; another cheque on 1 April 2004 cheque number 774166 again 
for ¥30,000; another cheque for the sum of ¥30,000 on 25 May 2004, cheque 
number 779313; a cheque for the sum of¥300,000, cheque number 797254 on 7 
December 2004; another cheque for ¥210,000, which you have confirmed that is 
cheque number 806532 on 29 March 2005; and another cheque oj ¥50,000 that 
being on our records being the last payment made in respect of this claim, that cheque 
number 816796 on 2 August 2005. You confirm you or even yourfamily never received 
any? 

A: This is a surprise to me. 



672- 



THE CHAIRMAN: And the evidence says that Mrs Josepha Suvulo, she has not 
received them either. 

A: No. 

Q: The money has not gone to anybody injourfamily, not Josepha or anybody? 



A: No. 

j2' Yes you might care to think about that because it seems that 
money that had been paid out. According to the Finance Department, 



there is a lot of it has 
been paid out 



A: My family never received any more payment after this R240,000, never. 



MR GORUA: That has been confirmed by Josepha who appeared before 
Commission. The family has not received any other payments. Commissioner, I have no 
further question." 



the 



What is even more serious in this case, is that a cheque for the sum of 
K300,000.00 was made payable to Josepha Pawen Suvulo who is the claimant, 
yet it is not clear as to how Patterson Lawyers were able to collect the cheque 
and deposit it into Patterson Lawyers Trust Account when the cheque was 
made payable to Josepha Pawen who is the claimant and when no instructions 
were ever received from Josepha. An investigation be conducted into who 
actually benefited from this payments. 

Evidence - Zacchary Gelu ("Gelu") 

Mr Gelu appeared twice before the Commission following serious issues raised 
in relation to his conduct as the former Solicitor General and as a private 



673- 



lawyer having carriage of this matter whilst been the Solicitor General. He 
confirmed that Tony lived with him for three years during the time in which the 
claim was pursued. 

Gelu confirmed that Patterson Lawyers received instructions from Tony Pawen 
following what he described as the alleged failure by Josepha to properly account for the 
first payment of K30,000.00. He confirmed that they (Patterson Lawyers) never 
contacted Josepha about the instructions by Tony Pawen. 

Gelu confirmed that they (Gelu/ Tony) had a joint account but stated that it was not at 
BSP Boroko but Westpac, Waigani. It is submitted that either Tony or Gelu may have 
mislead the Commission or it was simply a case of coming up with an answer that was 
false. Further, investigation be conducted into this issue, if they both maintained a joint 
bank account. 

Asked in relation to the creation of the joint bank account. Mr Gelu was asked:- 

"...Q: Was it with the consent or were the family members aware of such a joint account being created 
between j ou and Tony Pawen? 

A; The family members from home were in contact with Tony that was the 

arrangement they wanted. Mr Tony Pawen — 

THE CHAIRMAN: With pardon? 
A: Mr Tony Pawen. 

Q: Yes, who gave you instructions? So he has got a claim by Josepha, has already by tk Solicitor General's 
office through the Finance Department and then you get instructions 



674- 



from a member of the family, so he says, was there any contact withjosepha to sty, "we are intervening or? 

A: Yes, that happened, she in fact objected. 

Q: Yes, but now, has she objected after you had already done — -your firm had taken over the claim? 

A: Yes. 

jQ: Without any notice to her? 

A: We were more or less acting on the instructions — 

Q: I know you were, you were very much acting on the instructions to purely of one person only. Didyou have 
any information that he was acting for the family other than the fact that he said so? 

A: From the information instructions he gave was that — 

Q: Yes, I know but didyou have any confirmation that he was representing the other family? You see, I 
amjust looking at what you have got. She gets the first R30,000. He comes in and gets the next ¥37,000 
and then you decide you will have a joint account. It is two sides of the family obviously chasing the money at 
this stage, didyou give any notice to the Solicitor General's office that you were acting against the interest of 

Josepha? Or taking over her role? 

A: If I may recall, I think there was a letter made, in fact, I did not personally handle the matter in 
Patterson luinyers. It was Gilbert Maki, who was handling that matter, MrMaki. " 



675- 



Mr Gelu confirmed that proceedings were filed against Josepha Pawen but was 
not aware if the proceedings were discontinued. 

In relation to the payments received from Finance Department, Mr Gelu was 
asked:- 

Q: Mr Gelu, Mr Pawen advised the Commission that up until now he was aware of only two payments 
been made. First being the K30,000 that was paid to Josepha and other one being ¥210,000 and he 
advised that he was only aware oj that payment. When there any overpayments made apart from those 
two payments to Patterson lawyers'? 

A: I have checked with our Accounts, there were three payments made in fact; first one mas 
the K21 0,000. 

Q: Sorry? 

A:K210,000. 

Q ¥210,000? 

A: Yes, the second payment was ¥30,000 and the third payment is about ¥300,000. That is the 
payments that I confirm from the Accounts, our Accounts section. 

THE CHAIRMAN: ¥210,000, ¥50,000 and ¥300,000? 

A: Yes. 

Q: That is toyourfirm? 

A: To Patterson lawyers, yes. 



676- 



MR GORUA: And how much was paid to Tony or the family? 

A: There were legal fees to be paid and then there were cash advances requested by Tony whilst awaiting 
payments from Finance. I have to verify that with our Accounts, if I can recall about ¥L1 7 0,000. Q: 
¥170,000? 

A: Yes, paid to Tony. 

£):Mr Gelu, Mr Pawen advised the Commission that he was only aware of, like I said, only two payments; 

one or which was made payable tojosepha. The other payment of which he is aware of ¥21 0,000 that 

means - what effectively he said he is not aware of the ¥50,000payment and the ¥300,000payment. From 

the ¥210,000 he advised the Commission that he only received ¥1 10,000. 

A: Chief Commissioner, I have to verify that with the accounts but if 1 may be able to recall about 

¥170,000 was paid- ¥170,000. 



Q: Mr Gelu, to back him up those are the cheque copies which he provided to say that those are the only 
payments he received and his evidence to the Commission is that as to the balance - that is the ¥210,000 we 
are talking about - as to the balance he was advised that that money will be retained by Patterson Tauyers 
for what he said was security. Tie may have meant legal fees and all those but up to date he said that he has 
not received the balance of the amount of money that was retained. That is, only ¥100,000, we are not 
talking about the ¥300,000 and¥50,000? 

A: Commissioner, if I could come back to the Commission sometimes next week to assist the Commission 
in producing the accounts from the accounts section. I would not be in a position right now to assist very much 
in the payments. 

Q: Mr Gelu, when do you thinkyou will be able to provide records? 



677- 



A: Monday, Tuesday, depending on your time. 
Q: Tuesday? 

A: Yes, Tuesday. " 

Mr Gelu never provided any response or the information as he undertook to 
do so. In relation to the fees charged by Patterson Lawyers, Mr Gelu was 
asked:- 

'. .Q: Are you saying thefee isjustifiable ? 

A: That is the amount, as I said, Gilbert Maki may have estimated but fust looking at it, 
it may be a bit more, meaning the assessment is done by Mr Maki himself so my view is $ 
the amount is excessive, 1 may not say on behalf of Mr Maki but looking at the amount, it 
my be unreasonable. 

0: You say it is unreasonable? 

A: Yes, it may be unreasonable. 

Q: Mr Gelu, that could be the reason why Mr Pawen actually referred this matter to 
lawyers' Statutory Committee. 

A: Yes. 

Q: You are aware of that referral ly MrPawen? 

A: Yes, I am aware of that referral, yes Commissioner, 
jQ: Was the matter resolved or did the Lauyers' Statutory Committee 
respect of the complaint? 



make a decision in 



678 



A: If I may recall it has not been deliberated on by the Tanyers' Statutory Committee. 

jQ: Didyou orMrMaki ever do a response to the Tanyers' Statutory Committee in respect of the complaint? 

A: Chief Commissioner, I cannot really recall now whether a response was made but that can be — / will 
check that one out. 

Q: Could you provide a copy together with those documents by Tuesday, the response to Tanyers' Statutory 
Committee? 

A: Yes, I mil check the response. " 

Mr Gelu has not provided any response despite his undertaking to the Commission. Mr 
Gelu was then asked in relation to the issue of whether or not he received any payments 
from Tony Pawen (or benefited from this matters) and as to his conduct in relation to 
this matter. He was asked:- 

"...Q: That would in essence more or less provide the details of all the work that was done. Mr Gelu, we 
come back to that cheque that was made payable to you and Mr Pawen. Didyou receive any 
money from these payments? 

A: If any monies are to be received by me, it would be through the cost that is payable to Patterson Tanyers. 
Chief Commissioner, it would be improper for me to receive any monies that are paid into a joint account or 
to any that is paid by way of cash. In relation to thejoint account, I am onlyfacilitating the process ofpayment 
to go to the family. In receiving the amount directly from Mr Pawen, no, that would be double dipping if I do 
that because we have already received our cost, when the cost was paid and as a relative it would be bad for 
me to get monies from him directly in relation to this particular case. 



679- 



Q: On that aspect I amjust thinking as you would appreciate from the start you bang as the former Solicitor 
General was involved in the settlement, and then if you like towards the end, you have now created a joint 
account with Mr Pawen, this time if you like to facilitate the payments, would that be proper - ? 

A: That may not be seen proper but I joined Tony Pawen to thejoint account basicalhl n a balance and 
check that Tony should not misuse this money . We paid directly to Us account and then to the family and I 
made sure that he goes home to the family to make sure this mony reaches the village, basically that is the 
whole idea. " 

69. It is submitted that Mr Gelu knew very well that his involvement into the further conduct 
of this matter raises serious issues that amount to unprofessional conduct as a lawyer and may 
border on fraud. The reasons are:- 

He was involved in the settling of the case. He signed the deed of release; 

He admitted in a similar case (Thomas Moruwo) that the amount of 

K800,000.00 may seem unreasonable. Furthermore, he deliberately refused to 

take note of the NEC decisions and the CACC advice of which the Solicitor 

General/ Attorney General is a member of the CACQIt is possible he came up 

with the amount of K800,000.00 as Josepha never claimed a specific amount; 

Tony lived with him for three years, he certainly played a part in getting Tony to 

issue instructions to Patterson Lawyers; 

The letters purportedly written by Mr Kuvi, how did they come into his 

procession and attached to his affidavit; 

The letter asked for a cheque of K800,000.00 to be paid when evidence clearly 

indicate some payments were already made; 

Created a joint account with Tony Pawen; 

Cheque was made payable to Gelu and Tony; 



Patterson Lawyers never got instructions from Josepha; 

A cheque for the sum of K300,000.00 was made payable to Josepha Pawen yet 

Patterson Lawyers picked it up and deposited the cheque; 

Court proceedings were filed against Josepha simply to frustrate her attempts to 

recoup K21 0,000.00. 

The above are some of the issues relating to the conduct of Mr Gelu. It is submitted that 
Mr Gelu, Patterson Lawyers and other persons may have benefited from this payments 
as evidence clearly indicate that the immediate family members only received 
K140,000.00. The rest is unaccounted for. 

It is clear from this case that the National Executive Council ("NEC") played a major 
part in the settlement of this matter. It may be a political decision. It is submitted that 
clearly this is a dependency claim. The laws adequately address issues arising from 
dependency claims. In this case, it is submitted that the NEC should not interfere with 
the work of the relevant State agencies, such as the Solicitor General's Office and Public 
Curators Office perform their roles in such circumstances. 

John Kawi in his evidence also commented that this was a dependency claim and the 
figure proposed in the NEC submission was way above the amount awarded in a 
dependency claim. When asked what he knew about the claim, Mr Kawi stated (quote, 
only part) > 

" So I said, rntii I am satisfied I am sorry but this is one instance where I will have to 

defy the NEC direction to settle for ¥300,000. I made that very clear. I said I will not settle this for 
¥300,000 because although I sympathise with the death of the students which was at the hands of police, we 
also got in touch with police to give us instructions on this. Assuming that police would be responsible, this 
was the line I was taking that we do not settle the amount, these two deaths in the amount of ¥300,000 
each. My thinking was that it must be properly calculated using dependency claims. As a dependency claim 
using the three 



681- 



per cent tables, if it was not a dependent)/ meaning, if the students who died did not 
have any families on their own, kids on their own, this at its best could be treated as 
a contingent type of customary dependency. That is how I viewed it and so I made a 

file notation on this. It is true there was no court proceedings issued in these two 
matters. But my file notation I recall was that these matters must be looked at from 
the line I was advocating and so that is the reason why I said I will defy NEC 
instructions to settle at K5 00,000 each. That is my only against in this matter. A.s 

you pointed out Gelu, I do not know how he couldjustify Ms but he comes in and 
settles it from an amount higher than the NEC directive. " 

In regards to payments made, Mr Thaddeus Kambanei stated that it would bp unusual to 
change the name of payee half way through or that is after some payments had already 
been made, because once the name of the payee is changed the "system" cannot pick-up 
how much has so far been paid in respect of the same claim the payments have been 
made. 

Mr Kambanei was asked:- 

"Q: Mr Kambanei, if you go to page 2 under the schedule it says, "the releasor is Josepha Pawen Suvulo", 
and in fact the signature appears on the third page apparently is that of Josepha Pawen Suvulo. From 
your experience of the practice in the office of tk Department of Finance, is this an item that you 
expect your officers to cross check to ensure that the payee on your cheques that you release is consistent 
with what is set out in the deed of release? That is really the crucial document as far as law is 
concerned or liability of the State is concerned, put it that way. I guess, fust generally speaking would 
this be one aspect that you would expect your officers to check with? 

A: Absolutely yes. 

Q: So the fact that mid way through payments of -first off, we have the payee on the cheque being the name of 
the deceased person, Mathew Pawen — sorry, as stated in the summons. That is obviously very 
unusual? 



682- 



A: It is very unusual, yes. 

Q: It is not the releasor, the person that is releasing the State off responsibility? 

A: No. 

Q: But jour recollection, you have no recollection of this ever passing through jour desk? A: No, not at 

all." 



Findings: 



Zacchary Gelu's actions amount to conflict of interest. Further, actions amount to 
unprofessional conduct. Failed to comply with NEC decision. 

Mathew Pawen was not a UPNG student. 

K800,000.00 was far in excess. 

The two letters purportedly written by Mr Francis Kuvi were a fabrication and act to 
defraud the State. Mr Kuvi denied having any knowledge of this matter nor did he draft 
and or sign the two letters. Fraud. 

Patterson Lawyers had no instructions from Josepha Pawen as such had no authority to 
act on behalf of her. Tony Pawen had no lawful authority to give instructions as it was 
Josepha who had initiated the claim as such she was the legitimate appointee to pursue 
the claim. No application was made to remove Josepha to continue to represent the 
family of late Mathew Pawen. 



683- 



Gilbert Maki or Patterson Lawyers had no lawful instructions to act for Josepha. 

Patterson Lawyers bills were far excessive. 

Recommendations 

Zacchary Gelu be referred to the Lawyers Statutory Committee for unprofessional 
conduct. Further, he be referred to the Police for further investigations if he actually 
benefited from this claim. 

Furthermore, Zacchary Gelu be banned from been employed by the State or any of its 
Statutory bodies. 

Patterson Lawyers be referred to the Law Society for acting without lawful instructions 
and receiving payments from the Finance Department. 

Investigations be further conducted into the conduct of Gabriel Dusava. Mr Dusava had 
no instructions to collect the cheque of K21 0,000.00 from the Finance Department. 

Patterson Lawyers bills were very excessive. 

Payments to this claim were purportedly made payable under two different payee names 
by the Department of Finance, which might be fraudulent in nature. Investigation be 
further conducted in relation to the cheques that were returned. Were they cancelled? 

Matter be referred to the Police to further investigate the beneficiaries of this claim. 



684- 



89. No more payments be made. 



Index of Relevant Documents 



1-OCP 



2-UPNG 



3-SNEC 



4-SNEC 



5-SNEC 



6-DF 



13-DF 



Copy of the Commission of Inquiry Report into the 

2001 UPNG student-led unrest. 

Copies of confirmatory documents provided by 

UPNG Registrar as requested. 

Copy of Minister for Justice, Hon. Puri Ruing, MP 

filed a Policy'Submission No. 94/2002 to NEC 

Copy of Central Agencies Coordination Committee in 

its Meeting No. 15/2002 Paper No. 2.1.1 

Copy of NEC Decision No. 142/2002 Special Meeting 

No. 19/2002 

Copy of letter dated 18 September 2002 from Solicitor 

General to Acting Secretary for Department of Finance. 

Copy of the signed Deed of Release 

Copy of FF3 form for payment of K30,000 

Copy of FF3 & FF4 forms for payment of K300,000 

Copy of FF3 form for payment of K21 0,000 

Copy of letter dated 1 9 February 2003 from Solicitor 

General to Secretary for Department of Finance. 

Copy of letter dated 24 June 2003 from Acting 

Solicitor General to Secretary for Department of 

Finance. 

Copy of letter dated 14 December 2003 from Acting Solicitor 

General to Secretary for Department of Finance. 



(d) Moale Haus and Sambra Haus 

Investigation Report on Moale Haus (Tripoli Building) lease and fit-out - by Paul Paraka 
Lawyers and Acanufa & Associates Lawyers 20 May 2004 

Investigation Report on Sambra Haus lease — by Pacific legal Group Lawyers 13 September 
2006 

By letter of 11 May 2009, the Attorney-General referred to this Commission the 
abovementioned Reports and the two NEC Decisions that concern the said Reports: 

NEC Decision No. 296/2003 made 18 December 2003 and dated 19 December 2003; 
and 

DEC Decision No. 94/2005 made 18 May 2005 and dated 20 May 2005. 
The Commission also received copies of the following correspondence that are relevant: 

Letter dated 13 May 2009, Hon. Dr Allan Marat MP, Minister for Justice & Attorney- 
General to Hon. Peter O'Neill CMG, MP, Minister for Public Service - with copy of 
NEC Decision No. 220/2008 made 15 October 2008 and dated 17 October 2008; and 

Letter dated 14 May 2009, Hon. Peter O'Neill CMG, MP, Minister for Public Service to 
Hon. Dr Allan Marat MP, Minister for Justice & Attorney-General. 

The exchange of correspondence between the Minister for Justice & Attorney- General and 
the Minister for Public Service suggested there had been no (or 



686- 



limited) follow-through of directions of the National Executive Council following 
consideration of the said investigation reports which were both commissioned by the NEC 
at different times. 

This brief comprises three (3) arch lever folders: 

Counsel's Brief of documents and the transcript 

Investigation Reports and documents from Attorney-General 

Payment Vouchers from Finance Department and Briefs from Alfred Vele 

Relevance to the Commission's Terms of Reference 

On 1 8 December 2003, the NEC approved the fit-out cost of Moale Haus (Tripoli 
Building) at an amount of K12,684,549.00. 

On 18 May 2005, NEC resolved: 

that Department of Finance further negotiate the cost below K8 million. 

Department of Justice & Attorney-General refer the Investigation Report to relevant 
authorities including the Ombudsman Commission for investigation of leaders implicated 

Payments had been made by Department of Finance in part setdement of the said fit-out 
costs. It is clear the claim exceeds K300,000, the claim was made within the period of the 
TOR 1 January 2000 to 31 July 2006 and payments have been made by Department of 
Finance 



Essential background for purpose of investigation 



687- 



At the request of the NEC, investigations were conducted into the lease and fit-out of the two 
buildings that accommodate departments of the State. 

Controversy surrounds claims by the Attorney-General that despite directions of the NEC for 
referral for prosecution of those implicated, no action has been taken to make such referral to the 
Ombudsman Commission, police or such other appropriate authority. 

This is all now referred to this Commission of Inquiry for inquiry by the Attorney- General and the 
Commission has also received a copy of the letter from the Minister for Public Service. 

The following persons were invited to assist the Commission: 

Hon. Dr Allan Marat MP Attorney-General and Minister for Justice - as to his letter to the 
Commission dated 11 May 2009 and his exchange of correspondence with the Minister for 
Public Service 

Hon. Peter O'Neill, CMG, MP Minister for Public Service - as to his letter to the Attorney- 
General dated 14 May 2009 

Mr Gabriel Yer, Secretary Department of Finance - as to payment vouchers for all payments 
made in respect of these claims 

Secretary to NEC — as to the NEC decisions referred to above and compliance (if any) with 
the same — by whom, when and what etc. 

This matter was opened on 19 August 2009 and the Commission took evidence on 27 
August 2009 from: 



1. Hon. Dr. Allan Marat MP, Attorney-General and Minister for Justice 



Mr Manly Ua, Acting Secretary, National Executive Council 

Mr Alfred Vele, Investigator and Account with the Commission 

By the NEC Decision No. 94/2005 dated 20 May 2005, the NEC after noting the findings and 
recommendations of the Investigation Report: 

"3. directed the Department of Personnel management in consultation with the Department of Justice and 
Attorney-General, to take appropriate disciplinary action against public servants implicated in the Investigation 
Report in accordance with the Recommendations in part "G" of the Report" 

"4. noted that the Office fit-out cost has been negotiated downward from Kl '2,684,549 to K8 million and that 
part-payment has been made, however, directed the Department of Personnel Management to further negotiate the 
cost below K8 million " 

y "6 directed the Department of fustice and Attorney-General to refer the Investigation Report to the relevant 
authorities including the Ombudsman Commission for investigation of leaders implicated under the leadership 
Code." 

In evidence, the Attorney-General and Minister for Justice confirmed that there had been no 
action taken by his Office and his Department in compliance with the abovementioned NEC 
directions. Dr Marat also stated he was not aware of any other officer of the State referring the 
persons implicated to any law enforcing agency for further investigation or prosecution. 

When asked generally as to systems and processes for the dissemination of NEC Decisions and monitoring 
compliance with same, Dr Marat said "I think it is an area that needs to be monitored, not only monitored but 
there needs to be some mechanism in place to ensure that ministers and their departmental heads are actually carrying 
out any directives by NEC. " 



689- 



Mr Manly Ua, Acting Secretary NEC said there was no record as to compliance or otherwise of 
the abovementioned NEC directions. Up until 1989, the role for monitoring compliance with 
NEC Decisions was the responsibility of the NEC Secretariat but that was shifted to the 
Department of Prime Minister in the Performance Management Unit. It was also suggested the 
Central Agencies Coordinating Committee played a role. The Commission has also received the 
following: 

Payment vouchers from the Department of Finance. 

A file from Dr Marat containing a brief on a Writ recently filed in the National Court seeking 
CPI adjustments on rent on Moale Haus. 

Documents from Manly Ua Acting Secretary NEC being the policy submissions and NEC 
Decisions 

On 7 September 2009, Mr Joshua Mule, Manager Government Office Allocation Committee 
(GOAC) and Mr Sam Koim, Legal Officer Solicitor-General Office (SG) attended in 
conference with Counsel Assisting and Technical Counsel. 

The GOAC: 

y is established and functions in accordance with "General Order 20". Mr Mule was to provide 
the Commission with a copy of this General Order. 

is chaired by the Secretary Department of Personnel Management 

membership includes State Solicitor, Secretaries of Lands & Physical Planning, Finance, 
Works, National Planning. 



> is located within the Department of Personnel Management 

690- 



The Commercial Lease (prepared by the State Solicitor) was dated 27 September 2002 and 
executed under common seal by the Lessor (landlord) and by the "Minister for Lands" for the 
Lessee (tenant). The term of the lease is ten (10) years and rental payable is K3,300,750 per 



annum. 



It was not disclosed whether the document was lodged at Stamp Duties Office and registered 
with Registrar of Tides. The lease terms appear normal with one exception and that is Clause 
3.3(d) which requires the State to paint the interior once every three years.' 

The building "Moale Haus" is occupied by divisions of a number of Government Departments 
including Migration (Foreign Affairs), Labour, Commerce & Industry and Co-operative 
Societies. 

The management of the State Departments' occupation of the building and the payment of rent 
is a major problem area. GO AC merely facilitates arrangements to occupy the building and have 
nothing to do with receipt and payment of rental invoices. 

GOAC say that function is performed by Finance Department Corporate Services Division. 
Clearly there is no auditing of invoice records prior to and after payments are made. Neither 
GOAC nor Finance Department can conclusively say that invoices have been correcdy raised by 
the Lessor and then audited and paid by the Lessee (State). 

In the Writ of Summons WS 539 of 2009 filed 14 May 2009, the Lessor (now known as Moale 
Enterprises Limited) claims CPI adjustments on rental for the period January 2003 to September 
2007. The Plaintiff claims a total of K2,371,301.67. 



691- 



I 



From the Commission's analysis of payment vouchers obtained from the Finance Department: 

CPI adjustments have already been made by the Lessor in 2005 and 2007 invoices which 
have been paid. 

There may have in fact been an overpayment on CPI adjustments to rental payable. 

The Lessor invoiced and the State paid for car parking in the period 2002 to 2006 totalling 
K469,333.33 which is not provided for in the lease. The State is entided to a refund of such 
payments. 

The Solicitor-General's Office has advised that the State was out of time to file a Defence and 
has applied for leave to file or to extend time. The application has yet to be listed and the Court 
file cannot be found in the National Court Registry. Options discussed included: 

A State to pursue recovery of payments for car parking and excessive CPI adjustments on rent 
by filing a Defence and Cross-Claim or commencing fresh proceedings or seeking 
adjustment on the next rental invoice 

A State to insist on the Lessor providing full and complete particulars of the claim and discovery 
of documents and the Lessor establishing its case as to liability and damages. 



Findings 

On the documents produced and the evidence provided, the Commission makes the 
following findings: 



692- 



There is no system in place that tracks compliance with decisions and directions of the NEC. 
That function was performed by the Secretariat to the NEC and was then transferred in 
about 1989 to the Department of Prime Minister in what is now known as the 'Terformance 
Management Unit" which is within the Policy Division. 

The non-compliance with Decisions of the NEC does not appear to be cause for discipline 
or other corrective action with or concerning Departmental Heads or other agencies of the 
State. 

The claim filed in the National Court on 14 May 2009 by Moale Enterprises Limited against 
The State WS 539 of 2009 must be defended. On examination of the payment vouchers 
obtained from Finance Department, CPI adjustments appear to have been factored into 
invoices raised and payments made in 2005 and 2007. As such, there is no basis for the claim. 

y There is immediate need to have rental claims and payments reconciled periodically. Unless 
monitored by the GO AC, payments may be made over and above what is payable by the 
State (through Finance Department). 

Recommendations: 

1. The Department of Prime Minister and National Executive Council immediately improve its 
systems and processes to ensure that 

Decisions of the NEC are complied with fully and in a timely manner. 

Appropriate action is promptly taken where there is non-compliance with Decisions 
of the NEC 



693- 



The Solicitor-General and Government Office Allocation Committee must take all necessary 
steps to defend the claim filed in the National Court on 14 May 2009 by Moale Enterprises 
Limited against The State WS 539 of 2009 as there is no legal basis for the claim and to take 
necessary action as discussed above. 

The Government Office Allocation Committee and the Department of Finance shall 
immediately improve all processes and systems to ensure that all rental claims and payments 
are reconciled periodically so as to avoid payments being made over and above what is 
properly payable by the State (through the Finance Department). 



694- 



(e) AOG Jubilee University 



1. Introduction 



Investigations in this matter were not completed fully before the Commissions term came to 
an end. However the Commission has sufficient evidence from which certain clear 
conclusions and findings can be made. At the end of the day there is litde doubt that the 
AOG Jubilee University began with very good intentions but a lot of short cuts and outright 
illegality was committed along the way leaves no doubt that in this instance, the means did 
not justify the end. 

Up to the date of this report the AOG University is still not recognised as a University or 
Tertiary institution. Despite this fact, K4.5 million of tax payers money has already been 
spent on what is essentially a privately run institution. The K4.5 million was used to build 
classrooms (K1.7 million) and even to pay the fees of chosen students (K2.8 million) to 
study courses on Finance. Very senior executives of the AOG church including the current 
General Superintendant Reverend Phillip T Dalaka gave evidence to the Commission of his 
bewilderment as to where all the money supposedly given to the AOG University had gone 
to. 

Dr. William Tagis, the Director of the office of Higher Education told the Commission that 
he had advised the 'chancellor' of the institution Mr. Thadeus Kambanei, not to proceed 
with the inaugural graduation that took place in mid 2009. Earlier in 2005 when moves were 
made to establish the University, Dr. Tagis also advised the National Executive Council that 
the submission done by Mr. Kambanei who was also Finance Secretary at the time was not a 
convincing one because of factual errors and weaknesses in other areas including the 
Finances of the University and how exactly it would source funds to run its programmes. Dr. 
Tagis told the Commission that there was a lot of Political Pressure at the time the 
submission to NEC was done. 



695- 



Source of Information & Documents 

This brief is based on information and documents from the following: 
NEC Decisions No. 191/2005 of Special Meeting No: 44/2005; 
NEC Decision No. 34/2006 of Meeting No: 04/2006; 
Various Reports in the Newspapers; 

Department of Finance Cashbook, Ledgers and Payment Vouchers; 

Publicity in print medias by AOG Spokes Man, OHE and General Superintendent of 
AOG Church 

Dept of Finance Cashbook, payment vouchers and correspondences. 
Evidence given by Dr. William Tagis on the 09 th of July 2009, 

Evidence given by Reverend Phillip Tony Dalaka on the 09 th July 2009. Facts 

The NEC in its Decision No. 191/2005 of Special Meeting No. 44/2005 held on 24 th 
August 2005, approved in principle the establishment of Jubilee University and also 
approved the drafting instructions for the Jubile e University Bill .- [Refer Exhibit NEC 1]. 

On 15 th February 2006, the NEC made Decision No. 34/2006 in Meeting 

No. 04/2006 - [Refer Exhibit NEC 2]. The NEC deferred consideration of 

the Policy Submission No. 21 9/2005 and referred it to the Central Agencies 

69 
6 



Coordination Committee (CACC). It directed the CACC in collaboration with the 
Office of Higher Education and Secretary for Education to thoroughly vet the 
submission and determine the National Government's commitment in terms of 
finance towards the Jubilee University. 

No Financial commitment was ever made by the Government Despite that a total of 
three (3) payments aggregating K3 million were made from three (3) different Trust 
Accounts that were never intended for AOG Jubilee University, thus breaching 
Sections 14 and 17 (a) of the PFMAct. 

The first payment of K500,000.00 made out of Trust Fund Suspense Account No. 2 
on 18 th November 2003 was for the construction of classrooms at the University. 
The Decision to commit funds was made even before the two (2) NEC Decisions - 
[Refer Exhibit DF 21], 

A letter dated 11 th April 2005, from the Prime Minister (Grand Chief Somare) 
addressed to Secretary for Finance (Mr Thaddeus Kambanei) that was attached to the 
payment vouchers for the payment of K1.2 million, asked the Secretary to identify 
funds to fund projects in East Sepik Province - [Refer Exhibit FD 26]. The projects 
mentioned in the Prime Minister's letter included the Sepik Agriculture College and 
the Westbrook Technical College to be funded with K500,000.00 each. Despite the 
request for Kl million to be identified, Kl. 2 million was accessed from the Sepik 
High Way Trust Account (Account Code 450 - 448) and paid to Jubilee University on 
7 th December 2005, for the establishment of that University. 

The Requisition for expenditure (FF3) was approved by the Acting Deputy Secretary 
Operational Services Mr George Gwina as Section 32 Officer on 6 th December 2005. 



697- 



This approval for expenditure was made based on a Brief dated 5 th December 2005, 
received from the Acting FAS Cash Management & Expenditure Mr Otto Wangillen 
- [Refer Exhibit DF 26]. Mr Wangilkn recommended in his Brief to the Deputy 
Secretary Operations that a formal approval be given for the transfer of Kl .2 million 
from Sepik Highway Trust Account to Jubilee University as per the Government's 
decision. He even stated that the K1.2 million has been approved as Government 
grant for the University to develop the run down facilities at Sepik Agriculture 
College and Westbrook Ganba Technical College at Hayfield in Maprik to become 
School of Agriculture and School of Education respectively for the University and 
located in East Sepik Province whilst School of Business and School of Bible & 
Theology are located in Port Moresby. 

The sourcing of funds out of the Sepik Highway Trust Account to fund the 
establishment of the University was done in breach of Section 1 7 (a) of PFM Act 
which clearly states that "Moneys may be paid out of a Trust Account only for the 
purposes of the Account or as authorised by law ..." Also the payment was made 
despite there being no decision by the Government to allocate funds to AOG Jubilee 
University. 

The Sepik Highway Trust Account consisted of monies contributed by Members of 
Parliament from East Sepik Province. The funds were intended to be used as 
counterpart funding for upgrading and sealing of the two (2) Sepik Highways, 
bridges and other roads in the Province. On 29 th December 2006, the misuse of 
funds in that Trust Account were referred to by the then MP for Wewak Open 
Electorate Mr. Kimson Kare and was reported in the National Newspaper - [Refer 
Exhibit COR 16]. 

On 31 st December 2005, an amount of Kl ,500,000.00 was drawn out of the Cash 
Adjustment Account Code 410-03 on cheque No. 829208 and described as "^Course 
fees for District Treasuries Officers'- [Refer Exhibit DF 24]. 



698- 



This cheque was then described as been cancelled and credited back into the accounts 
through Journal Entry No. 349/05 on the same day - [Refer Exhibit DF 24]. 

On the same day a replacement cheque for a lesser amount of Kl,300,000.00 was 
drawn out of the same Cash Adjustment Account through cheque No. 829256 - 
[Refer Exhibit DF 21]. As the payment was made from the Cash Adjustment 
Account, it is in breach of Section 14 of the PFM Act, as that account was exclusively 
intended to facilitate payables and receivables adjustments at year end during the 
preparation of the Public Accounts Financial Statements. Therefore the action is 
deemed as accessing funds in the Government's bank account (Waigani Public 
Account) illegally and without authority through Appropriation Act legislated by 
Parliament. 

Originally it was planned that 89 public Servants would be enrolled at Jubilee 
University and have their course fees paid for by the Government. As there were only 
49 enrolled instead of 89, in effect it had cost the State K26,531.00 to enrol one of its 
District Treasury Staff as Student (that is dividing K1.3 million by 49 Students). This 
amount is excessive compared to those enrolled at the recognised Universities in the 
Country. 

The three (3) payments aggregating K3 million made to Jubilee University out of 
Public Funds as discussed above, were done without proper and clear basis of 
authority, thus breached Section 14 of the Public Finance Management Act. The details of 
these payments as noted from the cashbook are disclosed below: 



699- 



Date 


Cheque No. 


Account 




Transaction Description 


Amount 
K 


18/11/2003 


740063 


TFS 
Account 

No.2 




Construction of Classrooms 
[ubilee Uni 


500,000.00 


07/12/2005 


4 


Sepik 


H-wy Establishment of Jubilee 


1,200,000.00 






Trust 




University 




31/12/2005 


829208 


Cash 
Account 


Adj 


Pmt DT students, Banking 
studies 


1,500,000.00 


31/12/2005 


J/E No. 
349/05 


Cash 
Account 


Adj 


Chq # 829208 cancelled 


(1,500,000.00) 


31/12/2005 


829256 


Cash 
Account 


Adj 


Payment of C/Fees(89 DT 
Officers) 


1,300,000.00 












Total 








3.000.000.00 



The payment vouchers for the cancelled cheque No. 829208 drawn for K1.5 
million only was furnished. Request has been made with Department of Finance to 
furnish vouchers for the other payments were made — [Refer Exhibit DF 22], To 
date the requested vouchers were not furnished. 



D. Findings 



The AOG Jubilee University is not established by Law as is required. 

The AOG Jubilee University is not recognised by the Office of Higher 

Education 

Government Funds were used to establish and pay running costs of the 

AOG Jubilee University 7 without any money being appropriated through the 

normal budgetary process. 

Payments accessed were derived from the East Sepik Highway Trust Fund 

and so was illegal transfer of monies appropriated for a specific purpose. 

Mr. Thadeus Kambanei abused his position as Secretary for Finance to 

access funds illegally from monies legally set aside for other purposes. 



700- 



F.. Recommendations 



Mr. Thaddeus Kambanei be referred for investigations by the Police. 



G. Bougainville Crisis 

The Commission examined five (5) matters, four (4) of which were claims against the State for 
losses that are alleged to have occurred during the Bougainville crisis and one (1) concerned claims 
for consultancy services which were alleged to have been provided to the State. 

Angela Dyra Morgan 

NakituLtd 

Kareana Estates 

Jimendi Enterprises 

Johnjaintong & Joseph Bare Onguglo 

The Commission's findings specific to each matter are contained in the respective investigation 
reports. Essentially, the findings of the Commission were that all claims were setded despite - 

being time-barred 

Lack of notice pursuant to section 5 of the Claims By & Against the State Act 1 996 

No cause of action disclosed — all alleged breach of duty on the part of the State in failing 

to protect their property and business interests that were destroyed 

Claimants failure to identify wrongdoer primarily responsible 

Solicitor General accepting documents provided by claimants only 

Gross failure by Solicitor General to effectively seek instructions 

In one (1) matter, the claimant sought payment for consultancy services to the State allegedly 
rendered at the time the claimant was a serving Member of Parliament. The Acting Solicitor 
General denied having executed the deed of release. 



The Commission recommends the following: 

702- 



Investigation and prosecution of officers implicated 
Recovery of proceeds 



(a) Angela Dyra Morgan 

Parties 

For the State: 

(a) Attorney-General & Solicitor -General 

For the Claimant: 

(a) Angela Dyra Morgan 

Others (if any) 

Eda Ruma Pty Ltd 
Tuluan Enterprises Pty Ltd 

Mr. Henry Onsa (Director of Tuluan Enterprises-Director & Shareholder) 

Terms of Reference ("TOR") 

The applicable Terms of Reference to this claim are TOR a (1), (5), (7), (8), (9) 
(12) and (14) 

Documents and investigations conducted at: 

The documents were accessed from the SG file No. 491 of 2002. The matter was 
setded by the Solicitor-General and that no proceedings were ever filed in the National 
Court. In addition the team also conducted investigations into the other aspect of the 
claim on the following State/Corporate institutions:- 

Attomey-General (AG) 
Solicitor-General (SG) 

704- 



i 
I 

n 



Department of Finance 

Department of Lands & Physical Planning (DOL) 

Registry of Companies-IPA 

The Matter 

Mrs. Angela Dyra MORGAN submitted a claim to the State by way of a letter addressed to 
Mr. Damem, Attorney General and dated 12 th January 2002 (SG "1") for the sum of 
K6S6,800.00. Mrs. Morgan sought compensation for loss of rental and business between 
periods August 1986 to October 1996. Mrs. Morgan alleged that both her property and 
facilities on Buka were used during the Bougainville crisis and that "the State was the custodian of 
her people and property". That was the major substance of her claim against the State and 
included two (2) Invoices. 

Invoice 1 of the claim related to the loss of rental and land charges for the period 1 st January 
1989 to 31 st August 1994 for the property known as Buka Lodge and situated on Portion 301 
Milinch of Buka. An amount of K117,800.00 was claimed against the State 

Invoice 2 of the claim related to the loss of wharfage, rental and land charges for the period 
26 th October 1989 to 21 st July 1996 for the use of the facilities on the property known as 
Kokopau Passage which is situated on Portion 316, Milinch of Buka. An amount of 
K539,000.00 was claimed against the State. 

The period of which the claim was submitted and payments made in respect of the claim are 
within the COI TOR. 

REVIEW OF MATERIALS RELATED TO THE CLAIM 



705- 



The Commission's review of the file(s) held at the Office of the Solicitor General, 
the Department of Finance, IPA and Department of Lands disclosed material facts 
that are of significance to the findings of the Inquiry. 

The Claim had no supporting documentation to show that the State and/or its agents 
had ever used the facilities/properties on the said land during the Bougainville Crisis. 

There was no section 5 notice made by the Claimant to the State was sighted on the 
records of the Solicitor General's file. 

There was no application made to the SG or the Principal Legal Advisor to extend time 
to file the claim. 

No proceedings were commenced in the National Court by the Claimant to pursue the 
claim lawfully. 

5> Despite the lack of compliance with the provisions of the Claims by and Against the State, 
1996, the then Acting Solicitor General, Mr. Zacchary Gelu executed a Deed of Release 
[on behalf of the State] with Mrs. Morgan on 7 th September 2002 without admitting 
liability, for the full and final settlement of K656,800.00. 

Mr. Gelu also failed to consult the then Attorney General and Secretary for Justice Mr. 
Damem as required by section 13 of the Attorny General 's Art. 

That commitment made by the State on the Deed of Release was setded by way of five 
(5) installment payments made by the Department of Finance either to Mrs. Morgan 
direcdy or through the Solicitor Generals Office. The payments made are:- 



706- 



No 


Date 


Cheque No. 


Amount ("K") 


Details 


1 


24.12.02 


707315 


10,800.00 


See GE 883923 (Refer to "FD 
22") 


2 


25.12.03 


710209 


31,000.00 


See GE 890397 (Refer to "FD 
23") 


3 


07.04.03 


717119 


100,000.00 


Refer to "SG 18" 


4 


17.08.04 


787309 


315,000.00 


See GE 996323(Refer to "FD 
24") 


5 


14.12.04 


797900 


200,000.00 


Refer to "FD 24A" 






Total 


656,800.00 





> Despite the effect of NEC Decision 150. of 2003 to the Solicitor General on conducting 
review of settlements of claims against the State, part payments of the claim was processed 
and paid by the Department of Finance. 

y There was however stop- payments directives issued by Mr. Kumura on his appointment as 
Acting Solicitor General. The stop payments were later reviewed and cleared by his 
successor Mr. Kuvi on the final two payments which was settled by the Department of 
Finance. 

The Department of Lands 

The Department of Lands provided information to the Commission on the land described as 
Portion 316. The information provided shows that 

A Eda Ruma Pty Ltd (from documents sighted on the SG File and provided by the 
Claimant) was the registered legal lessee of the land known as Portion 301 Milinch of 
Buka (Buka Lodge) .Portion 301 Milinch of Buka was leased to Eda Ruma PL on 8 th 
August 1986 and up to 08 th September 1994. The land was later sold to Hamamas 
P/L on 8 th September 1994. (Refer to "SG 1.3 & 1.4") 



707- 



Tuluan Enterprises Pty Ltd was and is currendy the registered legal lessee of Portion 
316 Milinch of Buka (Kokopau Buka Passage). According to documents attached to the 
Claimants submission, Portion 316 Milinch of Buka (KOKOPAU BUKA PASSAGE) 
was leased to Tuluan P/L on 26 th October 1989 and up to 21 st July 1996. The records 
indicate however that the land was sold by PNGBC [when the company defaulted on its 
PNGBC mortgage payments] to Selau Corporation on or about May 1996. The former 
Managing Director of BSP, Mr. Mcllwraith confirmed that no mortgage sale was 
conducted by PNGBC on Bougainville during crisis and therefore any sale transaction 
including that of Portion 316 was illegal. The Registrar of Tides has confirmed that 
Tuluan Enterprises is the legal lessee. 

Investment Promotion Authority 

Investment Promotion Authority documents show that:- 

Eda Ruma Pty Ltd was incorporated as a Company on 23 rd June 1981. The shareholders 
are Angela Marisse Morgan, Leo Robert Morgan, Leonora Beta Morgan, Robert Polomi 
Morgan, Brigitte Takoi Morgan and Winifred Vavine Morgan. 

The Directors of the Company include Leonora Morgan, Angela Dyra Morgan (also 
named as the Company Secretary), Leo Robert Morgan and Michael Newall WILSON. 
The Company was de-registered on 12 th September 1996. 

Tuluan Enterprises Pty Ltd was incorporated as a company on 3 rd January 1 979 and was 
de-registered on 19 th December 1996. 



708- 



The Shareholders to the Company include Leo Robert MORGAN (1000 issued 
ordinary shares) and Henry Peter ONSA (1000 issued ordinary shares) 
The Directors of the Company are Henry Peter Onsa, Leo Robert Morgan and 
Angela Dyra Morgan (also named as the Secretary of the Company). 

Witnesses 

The following persons gave evidence on oath; 

• Mrs. Angela Dyra MORGAN 
(The Claimant) 

She confirmed that she had filed a claim against the State but did not institute any 
proceedings in the National Court. She also did not engage a lawyer to pursue her 
claim with the State. She confirmed that she received the full amount of 
K686,800.00 from the Department of Finance. 

(Refer to 'Transcript of proceedings COIFinance32 dated 13 October 2008 
from pages 850 to 884) 

• Mr. Zacchary GELU 

(Former acting Solicitor General) 

He said in evidence that the basis for settling the claim was the fact that the 
Bougainville crisis was due to the failure of the State to negotiate the Bougainville 
Copper Agreement. Based on humanitarian consideration he did not undertake 
any due diligence on the claim despite the lack of compliance with the provisions 
of the Claims by and Against the State Act. It was his opinion that because these were 
claims for services rendered the claim based on Invoices, therefore should be 
setded without going to court and that section 5 notice was not required. 

(Refer to COIFINANCE 57 dated 21" January 2009 and COIFINANCE 58 
dated 22 nd January 2009) 



709- 



Mr. Francis KUVI 

(Former acting Solicitor General) 

He confirmed issuing instructions to the DoF to uplift Mr. Kumura's stop payment and 
directed Finance to make the final installment payment The reason for this decision was 
that the claimant had provided sufficient documentation to the SG which was 
satisfactory and acceptable, though it was quite clear that the claim did not meet the 
statutory requirement of CBASAct. 

Mr. Kuvi also confirmed that Mrs. Morgan had contacted not only the Attorney General 
but also the Prime Minister and others in government on her claim, and that there was 
numerous times the Department of Finance was pressuring the Office to clear the 
matter for payment (after Mr. Kumura's stop payment directive. (See pages 1515-1516 of 
COIFINANCE61). 

(Refer to COIFINANCE61 dated 28* January 2009) 

Mr. Andrew Numbasa 

(Former acting First Assistant Secretary-DoF) 

He confirmed that the fall amount of K686, 800.00 was paid to Mrs. Morgan. (Refer 
to Transcript of Evidence dated 13 th October 2008 COIFINANCE 32) 

Mr. Francis Damem 

Former Attorney General and Secretary for Justice at the time the claim was 
submitted to the Department by Mrs. Morgan. His evidence was that in 1992 there 
was a policy initiated by the Mr. James Baker, then first Solicitor General not to setde 
claims arising out of Bougainville because of the crisis. Under the policy, State 
Lawyers were required to seek instructions and 



710- 



defend the claim concerning Bougainville. (Refer to COIFINANCE 72 dated 
18* February 2009-pages 2011 to 2016). 

Mr. Henry Onsa 

Mr. Onsa provided information to the Commission and informed the Commission he 
wrote to the Attorney General and the State Solicitor advising not to entertain the 
claim. He further advised the office that she (Angela) was neither a shareholder nor a 
director and had no authority and power to make decisions and act for Tuluan 
Enterprises Ltd. He confirmed that no claims have been filed by his company or 
personally against the State with respect to the use of the facilities on Kokopau. In his 
letter to the Commission he said that the claim was false, because the Defence Force 
[Royal PNG Constabulary and other government agencies] had never used the 
facilities or properties as claimed by Mrs. Morgan. (IPA records indicate that she was both 
Director] Secretary of the Tuluan Enterprises Umited) 

Mr. John Kawi 

Mr. Kawi said in evidence that section 5 of the CBAS Act does not provide any 
'discretion' to the Solicitor General or Attorney General to negotiate a settlement 
without going to court or initiating proceedings as required under section 5 of the Act. 
(See his evidence at COIFINANCE 74 dated 24 th February 2009 at pages 2133 
to 2136) 



711- 



Findings: 

The Deed of Setdement (Attorney Generals Act) 

The Deed of Setdement was executed without the consent and approval of the then 
Attorney General, Mr. Francis Damem. There was a standing policy that all Bougainville 
claims were to be defended by the lawyers within the Office of the Solicitor General. (Refer 
to the evidence of Francis Damem and John Kawi above). 

The Office of Attorney General/ Solicitor General 

(Claims by and Against the State Act and Attorney Generals Act) 

The Claim was not filed in accordance with section 5 of the Act. 

y There were no proceedings instituted by the Claimant in the National Court. 

The claim was filed with the Office of the Solicitor General well outside of the statutory 
six months time period as required by CBASAct. 

The claimant failed to seek extension of time to file its claim against the State. 



712- 



Due Diligence 

The then acting Solicitor General (Mr. Gelu) failed to liaise and consult the PNGDF on 
the claims made by Mrs. Morgan that the property was used by members of the security 
forces during the period of the crisis. The Invoice was not scrutinized by the State and 
accepted on its face value without any inquiries carried out as to its authenticity. 

There is no cause of action alleged against the State for the use of the property under any 
contract. 

The State failed to carry out a search of the Investment Promotion Authority to ascertain 
the registration and directorship of the two companies. The records of the company 
show that these companies have been de-registered and thus all the assets are vested in 
the Registrar of the Company until all outstanding fees /returns owed to IPA are 
discharged . (See Transcript of Proceedings COIFINANCE 55 19/12/08 at pages 
1293 to 1295). 

The State also failed to carry out a land titles search of the two properties to ascertain 
the ownership of the property. 

NEC Decision 150 of 2003 

Clause 3, 5, 9 and 12 of NEC Decision 150/2003 was not complied by the Solicitor 
General and the Attorney General. The claim was subject to the Decision and that Mr. 
Kuvi failed to institute proceedings in the National Court for a declaration that the Deed 
of Release was null and void and to commence full recovery of the amount paid by the 
DoF to the Claimant. 

Statute of Limitations and Fraud Act 



713- 



The claim was time barred pursuant to the Statute of Frauds <& Limitations A.ct 
F. Public Finances (Management) Act., 1996 

The Office of the Solicitor General failed to refer the claim to the Ministry of Finance 
for approval as required by section 61 of the PFMA. The claims have budgetary 
implications on funds lawfully available on the claims in excess of ¥.500,000.00. 

Recommendati ons 

Attorney General and Solicitor General 

The Solicitor General to institute proceedings to declare the Deed of Release null and 
void and to recover K686,800 from Mrs. Morgan. 

Mr. Zacchary Gelu 

Mr. Gelu should not be considered for any future appointments in the public service 
having being negligent in the manner he handled the claim without having regard for 
statutory provisions dealing with claim against the State. 



714- 



(b) Nakitu Ltd 

Does the matter fall within the Terms of Reference? 

The matter does fall within several Terms of Reference of the inquiry. Firstiy, it 
relates to the Deed of Release ("Deed") which was the basis on which settlement of 
K7 million was negotiated with the State and signed on the 10 September 2002. 
Secondly it relates to the continuous defiance of various NEC Decisions by the 
Solicitor General's office, Attorney General's office and the Secretary-Department of 
Finance, to obtain approval and clearance before making payments to the Claimant. 
Thirdly, it relates to the NEC Decision, authorizing the engagement of private law 
firms by the Attorney General to issue recovery proceedings against fraudulent 
claimants. 

This matter is therefore covered under the Terms of Reference: 5, 6, 7, 8, 9, 10 and 

12. 

Source of Information and Documentation 

This brief comprises of facts and findings from the files and records of: 
The Attorney-General's Office 
The Solicitor-General's Office 
Depart